Washington – The U.S. Commerce Department made public on Tuesday figures that show an increase in retail sales for the second month in a row, suggesting maybe American consumers are proving resistant to outside shocks and volatility in financial markets.
The Commerce Department figures showed on Tuesday a 0.2 percent increase that failed to fulfill Bloomberg’s forecast of 0.3 gain but still showed that July’s hit mark of 0.7 increase has not yet extinguish. Ten of 13 major retail categories showed increases last month, including auto dealers, restaurants and clothing stores.
Some sectors proved greater gains than others, being the automobile sector one of the most privileged ones by climbing a 0.7 percent in sales, even though it was still less than the 1.3 percent reported in July. Ford Motor Co., Fiat Chrysler Automobiles NV, and General Motors Co. all reported robust sales powered by pickups and sport utility vehicles, besides all three sector giants being recently at the perimeter of a labor strike.
As the Fed’s policy-setting committee meets on Wednesday to decide on higher interests rates against the backdrop of a tightening U.S. labor market, low inflation and slowing global growth, financial markets are highly dependent on rate expectations now pricing in a 27 percent probability of a rates increase.
“The Fed should be more reassured about the underlying pace of demand growth with this sales report and, at the margin, we think this report takes us another step closer to a rate increase on Thursday,” said John Ryding, chief economist at RDQ Economics in New York.
Meanwhile, categories such as food services, auto dealers, home-improvement stores and service stations, all influencers on the gross domestic product calculations, increased 0.4 percent last month after rising 0.6 percent in July, suggesting that the recent stock market sell-off had little immediate impact on U.S. household spending.
Another report showed that while consumers are holding up, factories are struggling. Manufacturing in the New York region contracted in September for a second straight month, reflecting declining orders and employment, according to figures from the Federal Reserve Bank of New York.
Source: U.S. Census Bureau