WASHINGTON – U.S. shoppers upped their spending in September, with sharp increases in sales at auto dealers, restaurants and gas stations.
Retail sales rose 0.6 per cent in September, a rebound after sales slipped 0.2 per cent in August, the Commerce Department said Friday. During the first nine months of the year, retail sales have increased 2.9 per cent compared with 2015.
Consumers are spending more eagerly as income gains have accelerated and the job market has steadily improved. The increased retail sales have offset the recent weaknesses in manufacturing and the broader struggles in growth worldwide.
“This morning’s report provides confirmation that the American consumer remains a key driver of economic growth as we slowly approach the very important holiday shopping season,” said Michael Dolega, a senior economist at TD Bank.
Stabilizing oil prices meant that sales rose 2.4 per cent at gas stations last month, although sales continue to be down on a yearly basis. Spending at restaurants improved 0.8 per cent in September, while auto dealers, building materials stores and furnishers notched monthly gains of 1 per cent or more.
Department stores suffered a 0.7 per cent sales decline in September, part of a broader, long-term setback for the anchor tenants at many shopping malls that are now competing with online outlets for customers.
Not all analysts are optimistic, since many corporate balance sheets are getting squeezed. And there are signs of fragility: excluding motor vehicles and gasoline, sales rose just 0.3 per cent in September after being flat in August and declining 0.2 per cent in July.
“We continue to believe that pressure on corporate profit margins will spur aggressive cost-cutting measures which will increasingly impinge on the pace of job growth through the course of next year,” said Joshua Shapiro, chief U.S. economist at the consultant MFR. “We therefore feel that the consumer is unlikely to be able to sustain a substantial ‘engine of growth’ role as we move through 2017.”
Consumer spending, which accounts for 70 per cent of economic activity, increased at a 4.3 per cent annual rate in the April-June quarter. That increase fueled much of the overall annual growth rate of a meagre 1.4 per cent during the second quarter.
Employers added 156,000 jobs in September. Unemployment ticked up to 5 per cent because more people— drawn by recent job growth— are starting to look for work.
In September, average hourly pay rose 6 cents to $25.79 and is now 2.6 per cent higher than it was a year ago. The pace of wage growth has strengthened in recent months, with pay rising at only about 2 per cent annually for much of the seven-year recovery from the Great Recession.