Sales at U.S. retailers and restaurants increased modestly in September as resilient consumers moderated their spending after splurging over the summer.
Sales rose 0.2% in September from the previous month, the Commerce Department said Tuesday, in a report delayed more than a month because of the government shutdown. Sales jumped 0.6% in July and August and 1% in June. Numerous reports on inflation, employment, spending, and growth remain delayed and the government won’t likely be caught up until late December.
The retail sales figures, which aren’t adjusted for inflation, suggest that Americans pulled back on spending in September as many households struggled with high prices for groceries, rent, and many imported goods hit by tariffs. The retail sales report covers about one-third of consumer spending, with the rest going to services such as travel, haircuts, and entertainment. Still, higher spending should lift the economy’s growth to a solid 3% annual rate in the July-September quarter, economists forecast, after a sluggish 1.6% expansion in the first half of the year.
Much of the spending, however, was driven by rising prices at gas stations and grocery stores. Still, sales rose 0.7% in September at restaurants and bars, a healthy gain in discretionary spending. Sales at clothing, electronics, and sporting goods stores fell.
Consumer spending could slow in the final three months of the year, economists warned. The government shutdown, weak hiring, and elevated inflation will likely cause more Americans to cut back.
“The moribund labor market and ongoing drag on real incomes from tariff-induced price increases suggest that this slowdown is likely to be maintained,” Oliver Allen, an economist at Panthenon Macroeconomics, a consulting firm, said.
Also on Tuesday, payroll processor ADP released its weekly measure of hiring, which found that companies cut an average of 13,500 jobs a week in the four weeks ending Nov. 8. The report is a sign hiring may have slowed since September, when the government said a solid 119,000 jobs were added.
The disparity found in economic data shows how the economy remains in an uncertain state despite the solid growth in the third quarter. Hiring has generally been weak and the unemployment rate has ticked higher, which could drag down consumer spending and the broader economy if it worsens. Unemployment rose to 4.4% in September, the highest in nearly four years, from 4.3%, according to the delayed monthly jobs report released last week.
Higher-income Americans are driving much of the gains, according to data from Bank of America and reports from retailers such as Walmart, as lower-income shoppers seek bargains and are more likely to spend more on necessities.
Still, some retailers issued positive reports Tuesday, including electronics chair Best Buy and Dick’s Sporting Goods. Best Buy lifted its sales and profit forecasts for the year.
Tuesday’s report comes before the crucial winter holiday season kicks off this weekend, when retailers earn as much as a fifth of their revenues. The National Retail Federation and other forecasters expect modest sales gains this year, compared with last year’s holiday, with the NRF projecting that sales will top $1 trillion for the first time.
Separate figures from the Labor Department suggest that inflation remains elevated but isn’t accelerating, which could make it more likely that a closely-divided Federal Reserve cuts rates next month.
Wholesale prices rose 0.3% in September from August, the Labor Department said Tuesday, and 2.7% compared with a year ago. The monthly gain in the producer price index was pushed higher by a sharp increase in gasoline costs. The yearly figure was unchanged from the previous month.
Core prices, which exclude the volatile food and energy prices, rose just 0.1% in September and 2.6% from a year earlier. Those figures are less than expected and suggest inflation pressures are cooling, economists said.
The retail sales figures land as many economic data are coming in mixed. Wage growth has slowed this year and is just modestly above inflation, a trend that is likely driving Americans’ concerns around affordability.
Wages, on average, rose 3.8% in September from a year ago, the government said last week. That is only modestly above September’s annual inflation rate of 3%.
But for many Americans, particularly those earning lower incomes or for older workers, wages are rising more slowly and are clearly trailing inflation.
The Bank of America Institute estimates that for the poorest one-third of households, pay grew just 1% in October from a year earlier, while the highest one-third saw their wages rise 3.7%. The gap between higher- and lower-income households matches an August figure as the widest in nearly a decade, the bank said. Bank of America uses anonymous data from its customers to calculate the figures.
And a separate report from JPMorganChase Institute showed that incomes for a typical household have retreated to levels last seen in the early 2010s, after the harsh 2008-2009 recession.
“Households are going into the end of the year with weak income growth and bank balances that remain flat, after adjusting for inflation,” the report said.
—Christopher Rugaber, AP economics writer
AP Retail Writer Anne D’Innocenzio contributed to this report.