US retail sales increase slightly; strong consumption

WASHINGTON (Reuters) – Retail sales in the United States barely rose in September as the rebound in motor vehicle purchases was offset by the largest drop in spending on restaurants and bars in nearly two years.

However, further details from the Commerce Department's report released on Monday were optimistic and suggested that consumer spending should close the third quarter with a strong momentum, which should boost economic growth despite anticipated slowdowns in weak exports and the housing market in difficulty.

Retail sales edged up 0.1% last month, following a similar gain in August. Economists polled by Reuters forecast a 0.6% increase in retail sales in September.

Retail sales rose 4.7% in September over the previous year.

Excluding automobiles, gasoline, building materials and food services, retail sales jumped 0.5% last month. These so-called "basic" retail sales most closely match the consumption expenditure component of gross domestic product.

August data was revised downward to show that basic retail sales were unchanged from the previously announced 0.1% gain. Consumer spending, which accounts for more than two-thirds of US economic activity, is motivated by the strength of the labor market, with the unemployment rate hovering around the 3.7% recorded at their lowest level in the world. 49 years.

Difficult labor market conditions are gradually leading to higher wage growth. Strong consumer spending should help mitigate the effects on the economy of a growing trade deficit and continued weakness in the housing market.

STRONG ECONOMIC GROWTH

Growth estimates for the third quarter are above an annualized rate of 3.0%. The economy grew at a rate of 4.2% in the second quarter.

Strong economic growth will likely keep the Federal Reserve on track to raise interest rates in December. The US central bank raised rates last month for the third time this year.

The US dollar fell against a basket of currencies and US Treasury prices slightly reduced their losses after data released on Monday. Futures on US stock indexes are trading slightly lower. Last month, auto sales climbed 0.8% after a 0.5% decline in August. Revenues from clothing stores rebounded 0.5% after falling 2.8% in August. Online and mail order sales jumped 1.1% in September after rising 0.5% the month before.

Furniture store revenue increased 1.1%. Spending at hobby, musical instrument and bookstore stores rose 0.7% last month. There was also an increase in sales in electronics and appliance stores.

But Americans cut spending on restaurants and bars, as their sales dropped 1.8%. This was the biggest decline since December 2016.

Although the Commerce Department stated that it was impossible to determine the impact of Hurricane Florence on the data, the disturbances caused by the storm could have hurt sales in restaurants and bars last month.

Sales at building material stores increased 0.1% in September. Service station receipts declined 0.8%, likely reflecting a moderation in gas prices.