October 16, 2020 | 09:00
U.S. Retail Sales (Sep. 2020) — The Emperor Has Clothes
Bottom Line: Americans raced to the stores in September, buying just about everything in sight, especially clothing.
U.S. retail sales accelerated 1.9% in September, more than double expectations, following a 0.6% advance in August. This put sales 5.4% above year ago levels. After delaying purchases in earlier months, shoppersloaded up on clothing (11.0%, though still down 12.5% y/y). Auto dealers racked up 4.0% more sales, lifting their yearly pace to 11.1%. As well, demand for sporting goods, hobbies, music and books remained strong, with the broad category jumping another 5.7% to push its yearly advance to 14.4%...one of the best performing categories as people look toward outdoor recreation and indoor activities to spend their time. Also seeing good gains were furniture and home furnishing stores, health and personal care, and, because we are driving a little more, gasoline stations. Restaurant and bars did 2.1% more business, but the sector is still down 14.4%...still one of the hardest-hit industries. Online sales remained brisk, but the earlier frantic pace has cooled, with non-store retail receipts up 0.5% m/m and 23.8% y/y.
After declining 0.3% in August, the control measure of retail sales that feeds into personal spending snapped back 1.4% m/m and is up 9.1% y/y. This points to a strong gain of around 0.7% in September personal spending.
Despite scaled-back UI benefits, consumer confidence rebounded last month, supporting demand. Although consumer spending continues to be held back by less desire for travel and personal care services, it looks to have rebounded 38% annualized in Q3 after diving 33% in Q2. The strong burst of retail spending late in the quarter offsets some recent downside risk for the current period stemming from rising virus infections, and we wouldstill look for a substantial slowing in Q4.