September retail sales show largest monthly gain in seven months
September retail sales numbers from the United States Department of Commerce were up 1.1 percent compared to August.
At $395.5 billion, September showed the largest monthly gain in seven months, driven largely by automotive sales which were up 3.6 percent. September retail sales, which include non-general merchandise like automobiles, gasoline, and restaurants, were up 7.9 percent compared to September 2010, and total retail sales for July through September were up 8.0 percent annually.
The September uptick in retail sales brought about some feelings of optimism regarding a possible economic recovery for some analysts, but there is a general consensus that more evidence of growth is needed over a longer period of time, considering that consumer spending represents about 70 percent of U.S. economic activity.
Paul Dales, senior U.S. economists for Capital Economics, told the Washington Post that September’s increase “shows that households are not completely down and out,” but he added that weak hiring will likely prevent consumers from spending at this rate on a month-to-month basis and that households cannot be the sole group lifting the country our if its economic malaise.
And as LM has reported, in conjunction with flat or minimally growing retail sales is an ostensible stalling in freight growth to a certain degree as evidenced by recent reports from the American Trucking Associations and Cass Information Systems. Reports in recent months from both concerns show that freight growth is in a holding pattern brought on by high fuel prices, a crippled housing market, and lack of meaningful job growth, among other factors.
And with a recent lull in fuel prices there still remains a distinct possibility that retail sales will remain at current levels in the coming months. Freight volumes, specifically on the trucking side, are displaying volumes that are still well below pre-recession levels.
What’s more, Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast, told LM that with relatively flat retail spending occurring to a large degree. retailers are postponing their commitments and are waiting until the economic outlook becomes clearer, while they are risking stock outages by having very lean inventories.
Earlier this month, the National Retail Federation (NRF) said that projected 2011 holiday—defined by the NRF as sales in the months of November and December—are expected to be average.
NRF officials said that 2011 retail sales will be up 2.8 percent over 2010, coming in at $465.6 billion. This expected growth pales in comparison to the 5.2 percent annual increase in 2009 over 2009.
“Just when you think the U.S. economy is turning around, another factor comes into play that changes the game,” said NRF Chief Economist Jack Kleinhenz, Ph.D., in a statement “Persistently high unemployment, an erratic stock market, modest income growth and rising consumer prices are all combining to impact spending this holiday season. How Americans will react to shaky economic data is the question, but the good news for retailers is that shoppers have not yet thrown in the towel.”