WASHINGTON Reuters: In September, U.S. retail sales unexpectedly increased but there are fears that supply constraints could disrupt the holiday shopping season amid continued shortages of vehicles and other goods.
Retail sales rose 0.7% in the last month, Commerce Department said on Friday. Data for August was higher to show retail sales growing 0.9% instead of 0.7% as previously reported. Last month the markets were partly lifted by higher prices.
An ongoing global shortage of microchips is forcing automakers to cut production, leading to a scarcity of inventory in showrooms, which is boosting prices and limiting choice for buyers. Other goods are also in short supply amid congestion at ports because of a dearth of workers.
President Joe Biden announced on Wednesday that the Port of Long Beach would join the Port of Los Angeles, two of the nation's busiest, in expanding Round-the-Clock Operations to discharge an estimated 500,000 containers waiting on cargo ships offshore.
Over the course of COVID - 19 pandemic, spending shifted from goods to services straining supply chains. The rotation back to services like travel and dining out has been slowed by a resurgence of coronavirus infections over summer, driven by the Delta variant.
Retail sales are mostly goods, with services, including healthcare, education, travel and hotel accommodation, making the remaining segment of consumer spending. Restaurants and Bars are the only services category on the retail sales report.
While visits to restaurants and retail locations have yet to break out of their late summer plateau, high-frequency card transactions data suggests spending remains solid, said Sam Bullard, a senior economist at Wells Fargo in Charlotte, North Carolina.
Excluding automobiles, gasoline, building materials and food services, retail sales rose 0.8% last month after an upwardly revised growth of 2.6% in August. These so-called gross domestic product and consumer spending correspond the most closely to the core retail sales component. They were previously predicted to have surged 2.5% in August.
Economists believe consumer spending, which accounts for more than two-thirds of U.S. economic activity, almost stalled in the third quarter after a robust 12.0% annualized growth speed in the April-June quarter. Consumer spending growth estimates for the third quarter are around 2.0% rate.
Sluggish consumer spending also suggests that GDP growth braked sharply in the July-September quarter from the second quarter's 6.7% pace. The American Federal Reserve forecasts the economy grew at a 1.3% rate last quarter.
The government will release its snapshot of third quarter GDP growth at the end of the month. Some of the anticipated slowdown in economy reflect the declining stimulus from trillions of dollars in pandemic relief from the government.
With solid savings and a tighteneding labor market boosting wages, the foundation for economy and consumer spending is solid. The saving rate increased for the second quarter at a rate of 10.5%. The total number of job openings was 10.4 million in August.
Of course, strong job gains and an elevated savings rate should provide consumers with an arsenal of available funds for spending after what appears to be a pause in the third quarter as the Delta variant spread and fiscal economic impact payments faded, said Kevin Cummins, chief U.S. economist at Natwest Markets in Stamford, Connecticut.