Consumer spending in September better than expected

Retail sales rose 0.7% in September from the previous month, better than the 0.3% that was expected because of higher interest rates and concerns over a weakening economy, according to the U.S. Census Bureau.

Higher gasoline prices were cited as one of the reasons for the uptick in sales with gas station sales were up 0.9% for the month. The numbers are not adjusted for inflation. On a year-over-year basis, sales rose 3.8%, compared to a 3.7% uptick in the Consumer Price Index reported by the U.S. Bureau of Labor Statistics.

“September retail sales show that consumers have retained the ability and willingness to spend despite accumulating economic headwinds from higher interest rates and slowing growth,” National Retail Federation President and CEO Matthew Shay said.

Stripping away restaurant, auto and gas station sales, NRF reports September retail sales increased 0.5% from the previous month and they rose 2.2% from a year ago. In August, sales were up 0.2% month over month and up 3.6% year over year. NRF’s numbers were up 3.1% unadjusted year over year on a three-month moving average as of September and up 3.7% for the first nine months of the year.

“The consumer is still healthy, and today’s report shows households are forging ahead with plenty of buying power despite persistent inflation, rising interest rates and geopolitical conflicts,” NRF Chief Economist Jack Kleinhenz said. “Firm payroll growth over the past few months has likely helped spending across retail sectors. However, much of the rise was due to car sales, gasoline prices and food services. When you exclude those categories and look at core retail as measured by NRF, the pace of year-over-year growth is slowing.”

NRF reports September sales were up in five out of nine retail categories on a yearly basis, led by health and personal care stores, online sales and general merchandise stores. Following are specifics from key sectors on an annual basis.

• Health and personal care stores – up 7.3%
• Online and other non-store sales – up 6.2%
• General merchandise stores – up 3%
• Grocery and beverage stores – up 2.1%
• Clothing and clothing accessory stores – up 0.8%
• Sporting goods stores – down 1.6%
• Electronics and appliance stores – down 2.5%
• Furniture and home furnishings stores – down 6.5%
• Building materials and garden supply stores – down 6.5%