Sales of food and services by U.S. retailers rose more than expected in September, showing that consumers remain confident.
Total sales increased 0.7% from August, the Commerce Department said in a statement Tuesday. Economists surveyed by Reuters expected a gain of 0.3%. Sales rose 3.8% from a year earlier.
The index of August was also revised upward to 0.8% from an initial reading of 0.6%, which was already three times stronger than estimates.
The expansion last month was led by miscellaneous and store retailers, with a monthly gain of 3%. Higher prices of gasoline also boosted sales.
The strength in consumer spending reflects a tight labor market. The U.S. economy added 336,000 jobs in September, the biggest increase since January. The unemployment rate was at 3.8% and has remained below 4% for almost two years.
Holiday Spending
A survey conducted by Deloitte showed that U.S. consumers plan to increase spending to an average $1,652 this holiday season, or 14% more than last year. If confirmed, it would mark a return to pre-pandemic spending levels.
“We expect to see shoppers make their lists and check them twice for deals, but a return to pre-pandemic spending levels shows promise for the season overall,” Nick Handrinos, Deloitte vice chairman, and U.S. retail, wholesale and distribution and consumer products leader, said in a statement Tuesday. “Retailers can expect continued store growth as shoppers aim to maximize their budgets with their favorite retailer, presenting new opportunities to build loyalty.”
Another survey by Mastercard also forecast an increase of 3.7% in retail sales during the holiday season in the U.S.
Fed Decision
The data will be analyzed by Federal Reserve officials before they meet on Oct. 31 and Nov. 1 to decide on interest rates. The Fed maintained its benchmark rate in the range of 5.25% to 5.5% on Sept. 20, signaling that another hike could be necessary this year.
AFP
Inflation in the 12 months through September was 3.7%, the same level of August, the Bureau of Labor Statistics said Thursday. Prices rose 0.4% from August. The pressure came mainly from higher rents and gas prices.
Markets will also be watching closely public appearances of Fed officials before they enter a pre-meeting blackout next week. Fed Chair Jerome Powell speaks Thursday about economic outlook at an event in New York.
