After reporting much weaker than expected U.S. retail sales growth in the previous month, the Commerce Department released a report on Friday showing retail sales jumped by much more than expected in the month of September.
The Commerce Department said retail sales spiked by 1.9 percent in September after rising by 0.6 percent in August. Economists had expected retail sales to climb by 0.7 percent.
The much stronger than expected retail sales growth was partly due to a significant increase in sales by motor vehicles and parts dealers, which soared by 3.6 percent in September following a 0.7 percent increase in August.
Excluding the jump in auto sales, however, retail sales still surged up by 1.5 percent in September after climbing by a downwardly revised 0.5 percent in August.
Ex-auto sales were expected to rise by 0.5 percent compared to the 0.7 percent increase originally reported for the previous month.
Sales by clothing and accessories stores and department stores skyrocketed by 11.0 percent and 9.7 percent, respectively, while sales by sporting goods, hobby, musical instrument and book stores spiked by 5.7 percent.
Closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, jumped by 1.4 percent in September after dipping by 0.3 percent in August.
Michael Pearce, Senior U.S. Economist at Capital Economics, said the rebound in core sales may partly reflect seasonal factors, with the weather snapping back to seasonal norms helping explain the spike in clothing sales.
“But spending in most other areas also rose, including an encouraging 2.1% m/m increase in spending at bars & restaurants,” Pearce said.
Pearce said the stronger than expected retail sales growth “suggests the economy was carrying more momentum into the fourth quarter than anticipated, defying fears that the expiry of enhanced unemployment benefits in the summer would harm the economy.”
“But with new coronavirus infections on the rise, we are not rushing to revise up our forecast that GDP growth will slow to 4% annualized in the fourth quarter,” he added.
The material has been provided by InstaForex Company – www.instaforex.com
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