U.S. retail sales powered higher again in September, Commerce Department data indicated Wednesday, adding to concern that the hot domestic economy will produce renewed inflation pressures.
Headline sales rose 0.4% last month to a collective tally of $714.4 billion, stronger than economists’ consensus forecast of a 0.3% gain and the unrevised August estimate of a 0.1% increase.
The numbers make clear that Americans aren’t tightening their belts, even if they continue to tell pollsters that inflation is too high and the economy isn’t as strong as the data suggest.
Gasoline-station sales were down 1.6%, the report indicated, after Energy Department data showed the national average fell 3.6% from August to $3.338 per gallon.
The closely tracked control-group number, which excludes autos, building materials, office supplies, gas-station sales and tobacco, and feeds into the government’s GDP calculations, rose 0.7% on the month, well ahead of the Wall Street consensus forecast of 0.4%.
The Atlanta Fed, which will update its GDPNow forecasting tool later in the session, pegged its most-recent reading for third-quarter growth at 3.2%.
Fed Chairman Jerome Powell has said the central bank will be ‘data dependent’ in assessing its rate decisions following an outsized half-point lowering in September.
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U.S. stock futures extended gains following the data release, as traders bet that the solid spending tally supports a soft landing for the world’s biggest economy, even if it might tame bets on a big Federal Reserve interest-rate cut.
The S&P 500 is called 27 points higher, with the Dow expected to add 80 points from last night’s close. The Nasdaq, meanwhile, is called 130 points higher.
Benchmark 10-year Treasury note yields rose 4 basis points to 4.069% following the data release, while 2-year notes were up 4 basis points to 3.993%.
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CME Group’s FedWatch indicates a 92.7% chance that the Fed will lower its benchmark Federal Funds Rate by just a quarter percentage point next month in Washington, up from 51.3% in late September.
Commerce Department data last week showed that headline consumer-price inflation for September eased to an annual rate of 2.4%, the lowest since February 2021, while core price pressures quickened to 3.3%.
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The Labor Department’s September jobs report also suggested the risk of renewed inflation pressures heading into the final months of the year, with overall hiring pegged at 254,000 and the headline unemployment rate easing to 4.1%.
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