US retail sales up slightly last month

WASHINGTON • United States retail sales edged up last month, curbed by plunging petrol prices that offset surging car sales, government data released yesterday showed.

The Commerce Department reported retail sales for September rose just 0.1 per cent from August, half the increase expected by analysts. Adding to the lacklustre tone of the report, the department revised August's reading to flat, from a 0.2 per cent rise originally reported.

Retail sales are a sign of the strength of consumer spending, which drives about two-thirds of the US economy's activity.

The data, which account for less than half of all consumption, are seasonally adjusted but not adjusted for prices.

Last month, the small rise in retail sales reflected a 1.7 per cent jump in car sales, the strongest gain since May. That was offset by a 3.2 per cent drop in petrol sales at the pump.

Stripping out car sales, retail sales fell 0.3 per cent last month.

Excluding petrol, they rose 0.4 per cent. Stripping out both, sales were flat.

Restaurant and bar sales rose 0.7 per cent, while food sales dropped 0.3 per cent.

"With the strong dollar pushing down prices, slowing nominal sales don't necessarily imply slowing real consumption," said Mr Ian Shepherdson of Pantheon Macroeconomics. "Auto sales, which are booming... tell us more about the underlying state of the consumer than the other components of headline sales," he said.

Compared with a year ago, car sales were the strongest of all the sectors in September, jumping 8.8 per cent. In second place were sales in restaurants and bars, up 7.9 per cent. At the same time, petrol sales plunged almost 20 per cent.

Meanwhile, Labour Department data yesterday showed that sinking energy costs pushed US producer prices 0.5 per cent lower last month, another sign of deflationary pressures in the economy.

The fall in the producer price index was mainly driven by energy prices in the month, but food and services were also significantly lower. Compared with a year ago, the PPI index was 1.1 per cent lower, the eighth straight month the index was down on a 12-month basis.

Combined with a weak retail sales report, the numbers "confirm that the economy is stuck and deflation pressures are the key risk", said Mr Steven Ricchiuto of Mizuho Securities.


A version of this article appeared in the print edition of The Straits Times on October 15, 2015, with the headline 'US retail sales up slightly last month'. Print Edition | Subscribe