The U.S. Department of Commerce announced on the 17th that retail sales in September reached $714.4 billion, up 0.4% from the previous month. This figure slightly surpassed Dow Jones' expert forecast, which predicted a 0.3% increase.

On a year-over-year basis, retail sales rose by 1.7%. While this is a slower increase compared to August's year-over-year growth of 2.1%, the upward trend has continued.

For the entire third quarter (July–September), total retail sales increased by 2.3% year-over-year. The August retail sales figure remained unrevised from the previous month. Excluding automobiles and parts, retail sales in September rose 0.5% from the previous month, a sharper increase compared to the 0.1% gain in August.

Retail sales excluding automobiles, parts, and gasoline also grew by 0.7%, up from a 0.2% increase in August. Restaurant and bar sales increased by 1.0%, reaching $96.4 billion.

Economists note that these figures demonstrate consumers are still willing to spend, which bodes well for the retail sector as the critical year-end shopping season approaches. Monthly retail sales data mainly tracks goods sales, offering a snapshot of consumer behavior, a key driver of the U.S. economy. Since private consumption accounts for 70% of the Gross Domestic Product (GDP), it plays a vital role in economic growth. The U.S. economy largely follows the trends in retail performance.

Stronger-than-expected retail sales indicate that despite concerns over an economic slowdown, U.S. consumer spending has not weakened as much as feared.

Wall Street had anticipated that consumer spending would slow due to the prolonged period of high interest rates, slower wage growth, and the depletion of household savings. However, projections suggest that next year’s consumer growth rate could reach 3% as a result of the Federal Reserve's (Fed) interest rate cuts last month.

Michael Pearce, Chief U.S. Economist at Oxford Economics, commented, “Retail sales have been encouraging, supported by spending in food services and various retailers. With a resilient job market, strong household savings, and the impact of falling interest rates, next year’s consumption growth could approach 3%.”

By Hwandong Cho.

<Hwandong Cho>