September Retail Sales - Delayed Report Shows Slower Spending Exiting 3Q

In nominal terms, U.S. retail sales fell short of expectations advancing 4.3% year-over-year and 0.2% month-over-month in September.  Adjusting for inflation, spending advanced 1.3% year-over-year and retreated 0.1% month-over-month.  The month-over-month outcome shows deceleration compared to August (+0.6% nominal) and came in below forecasts for +0.4%.  Overall, the report indicates that some consumers started to back off on spending after several months of strength.  While wealthier shoppers continue to support overall outlays, sentiment has declined among lower income consumers amid sticky inflation and a softer job market.

• Real (inflation adjusted) retail sales advanced 1.3% year-over-year.  In September, retail sales grew 4.3% nominally netting real growth of 1.3% after adjusting for 3.0% inflation.  Higher spending at brick-and-mortar retailers (+8.2%), restaurant dining (+6.7%), online retailers (+6.0%) and motor vehicles (+5.1%) was partially offset by slower spending at the pump (+3.1%) and a decline in building materials (-2.4%).  Eight of thirteen categories advanced in real terms.

• Real (inflation adjusted) retail sales declined 0.1% month-over-month.  In September, nominal retail sales levels grew 0.2% compared to August netting a real decline of 0.1% after adjusting for 0.3% inflation.  Higher spending at brick-and-mortar retailers (+2.9%) and gas stations (+2.0%) was partially offset by declines in online retail (-0.7%) and motor vehicles (-0.3%).  Five of thirteen categories advanced in real terms.