U.S. retail sales fell for the first time in seven months in September, raising fears that a slowdown in the manufacturing sector could be beginning to spread to the broader economy.
The Commerce Department said retail sales dropped 0.3% in September from the prior month after an upwardly revised 0.6% increase in August.Prices on 10-year Treasuries rose and U.S. stocks fell after the data release, according to Bloomberg.
The drop in September was spurred by households slashing spending on motor vehicles, building materials, and online purchases. Both the median estimate in a Bloombergsurvey and economists polled by Reuters had forecast retail sales would climb 0.3% in September.
Auto sales fell 0.9% in September, the most in eight months. Withholding automobiles, gasoline, building materials and food services, retail sales were little changed in September, missing projections for a 0.3% increase. The National Retail Federation reported Retail sales in September were down 0.1% seasonally adjusted from August, but up 4.5% unadjusted year-over-year, excluding automobile dealers, gasoline stations and restaurants.
The so-called core figure corresponds more closely to the consumer spending component of U.S. economic activity, says CNBC.
“The drop back in retail sales in September was partly driven by a price-related fall back in gasoline prices, but the fact that underlying control group retail sales were unchanged provides another clear sign that consumption growth is slowing,” Capital Economics senior economist Michael Pearce wrote in a note to clients.
“The pullback in September compared with August is possibly a reaction to increased fears over U.S.-China tensions,” NRF Chief Economist Jack Kleinhenz said. “While uncertainty around trade policy and other issues has dampened consumer sentiment recently, consumers still have a lot going for them as evidenced by longer-term trends and factors like the tight labor market. September is a tricky month to measure because of seasonal factors like the end of summer and back-to-school spending, and this year’s early Labor Day may have moved up some spending into the last days of August.”
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