Markets
Retail Sales Rose 0.8% in September. Gasoline Stations Were 71% of It
US retail sales reached $745.0 billion in September, up 0.8% against a 0.3% forecast. Sales at gasoline stations rose 6.4% and supplied most of the gain; the 'control group' that feeds GDP grew just 0.1%.
On the surface, American shoppers had a strong September. The Census Bureau's advance estimate, published on October 15, put retail and food services sales at $745.0 billion, up 0.8% from August, more than double the 0.3% economists expected. August was revised up too, to a 1.3% gain from 1.1%.
Look at where the money went, though, and the picture changes. Sales at gasoline stations rose 6.4% in the month, as pump prices climbed during the Middle East conflict. According to coverage of the report, that single category accounted for about 71% of the overall increase; without it, sales rose 0.2%. Online and other non-store retailers, at $124.3 billion, grew 0.3%.
The number economists care about most, the so-called control group — sales excluding cars, gasoline, building materials and restaurants, which goes straight into the consumption part of GDP — rose only 0.1%, against a 0.3% forecast, after a 1.2% jump in August. Retail sales are reported in dollars, not volumes, so when prices rise faster than purchases, the headline flatters the economy.
Investors read it as a softer consumer and bought the stocks that would benefit from lower rates and a less aggressive Fed. The SPDR S&P Retail ETF (XRT) rose 3.68% to $87.82, its best close in a month. Nike gained 5.21% to $37.14 and Lululemon 5.31% to $99.09, both still far below where they started the year. The consumer discretionary sector (XLY) added 1.71%, and homebuilders rallied with falling yields: Lennar rose 5.66%.
The timing matters for the Fed. A report that is strong only because of fuel, published next to a producer price index that rose 1.3% for the same reason, strengthens the case that the September inflation burst is an energy story — and that households are already paying for it.