US retail sales experience substantial surge last month
Date
10/20/2024 2:46:24 AM
(MENAFN) Retail sales in the U.S. experienced a more substantial increase than anticipated in September, reflecting ongoing growth in the Economy for the third quarter. According to the Commerce Department's Census Bureau, retail sales rose by 0.4 percent last month, following an unrevised gain of 0.1 percent in August. Economists surveyed by LSEG had predicted a more modest increase of 0.3 percent, with estimates ranging from no change to a rise of 0.8 percent.
When excluding categories such as automobiles, gasoline, building materials, and food services, core retail sales rose by 0.5 percent in September after a stable increase of 0.3 percent in August. These core sales figures are closely aligned with consumer spending, a key component of gross domestic product (GDP). Current growth estimates for the third quarter hover around a 3.2 percent annualized rate, building on the economy's 3 percent growth pace observed in the second quarter.
The robust performance of consumer spending is likely to bolster the chances of the Federal Reserve opting for a smaller 25-basis-point reduction to the benchmark federal funds rate when it convenes early next month. Jeffrey Roach, chief economist for LPL Financial, commented that the strong retail sales suggest the previous quarter's economic growth was solidly above trend. He added that investors should keep an eye on any signs that unemployed individuals are struggling to secure paychecks, noting that he anticipates the Fed will likely implement a 25-basis-point cut in both November and December.
The Federal Reserve began its rate-cutting cycle last month with an atypical 50-basis-point reduction, bringing the benchmark rate down from a range of 5.25 percent to 5.5 percent to a new range of 4.75 percent to 5 percent. This adjustment follows a period during which policymakers raised the benchmark rate from near zero to its highest level in 23 years, as a response to surging inflation that peaked at a 40-year high of 9.1 percent in June 2022.
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