Many retailers rely on their sales from the holiday shopping season alone to buoy them throughout the rest of their fiscal years, so it stands to reason that poor numbers heading into November and December won’t exactly inspire confidence in consumer activity approaching the end of the year.
Reuters reported that retail sales in the U.S. continued sluggish growth heading into the fourth quarter, with a paltry 0.1 percent increase in October after plateaus in September and August. In juxtaposition to retail’s slight growth, the auto industry was hit hard as sales fell 0.5 percent in October — two steps back after a step forward with September’s 1.4 percent bump. Additionally, lower gasoline prices precipitated a 0.9 percent slide for sales at service stations.
Millan Mulraine, deputy chief economist at TD Securities, told Reuters that the numbers might be cause for concern.
“The weak reports will provide some cause for caution at the Fed, and while they are unlikely to change the prevailing bias for a December ‘liftoff,’ they could add to the case for a shallower tightening path thereafter,” Mulraine said.
Taking the rough month of the auto industry out of the equation, the retail sales metrics appear less gloomy with a 0.2 percent rise in October. This may explain the high level of consumer confidence, a 93.1 on the 100-point scale, that John Ryding, chief economist at RDQ Economics, said could help ease radical actions over flagging retail performance.
“The rise in confidence to the level last seen in July might ease a few concerns at the Fed about slowing growth in recent months,” Ryding told Reuters.
As the holiday shopping season officially kicks off with Black Friday in a matter of weeks, some retailers and regulators may have time for nothing but hand-wringing as the numbers come in.
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