Sales Rise Less Than Forecast as Americans Save Gas Money

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U.S. Retail Sales Miss Estimates With 0.1% October Gain

Sales at U.S. retailers rose less than forecast in October as consumers pocketed the money saved after fueling up their cars.

Purchases increased 0.1 percent after being little changed in September, Commerce Department figures showed Friday. The median forecast of 84 economists surveyed by Bloomberg called for a 0.3 percent gain. Receipts at service stations dropped for a fourth consecutive month as gasoline prices declined.

Consumers are showing some caution going into the key holiday-shopping season even as hiring reached a 10-month high in October and subdued prices at the pump support household budgets. The possibility of the Federal Reserve’s first increase in the benchmark interest rate since 2006, in addition to the fluctuations in stock prices, could limit Americans’ enthusiasm for shopping sprees.

“The consumer still is sitting on a fair amount of windfall from low gasoline prices,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, who correctly projected the change in sales. “I think we’ll see the consumer spend a little bit more aggressively through the rest of this year and into 2016 as we get a little bit more wage growth.”

Estimates for retail sales in the Bloomberg survey ranged from little change to a 0.8 percent increase. September’s reading was revised down from an initially reported 0.1 percent advance.

Wholesale prices unexpectedly dropped 0.4 percent in October, depressed by falling food costs, a separate report from the Labor Department showed Friday. Lower prices for eggs and meat contributed to the retreat, as did discounts for new-model light trucks.

Industry Breakdown

Seven of 13 major retail categories showed gains last month, led by building-material stores, restaurants and non-store merchants, which include Internet sales, according to the report from the Commerce Department.

Receipts at gasoline stations dropped 0.9 percent after falling 4 percent in September, pushing the value of sales over the past 12 months down 20.6 percent. The Commerce Department’s data aren’t adjusted for prices, indicating the decrease reflects cheaper fuel costs.

Households are finding support from the decrease in energy prices and a firming labor market. The average cost of a gallon of regular gasoline was $2.20 on Nov. 11, according to AAA, the biggest U.S. auto group. That compares with an average $2.46 this year and $3.34 in 2014.

Core Sales

Core sales, the figures that are used to calculate gross domestic product and which exclude categories such as autos, gasoline stations and building materials, climbed 0.2 percent last month, less than the 0.4 percent median forecast of economists surveyed by Bloomberg. The readings for September were revised up to show a 0.1 percent gain compared with a previously recorded 0.1 percent drop.

Falling gasoline and food prices probably also restrained the core readings. Sales at general merchandise stores, which include warehouse big-box merchants that also sell gasoline, fell 0.4 percent. Grocery stores, which typically see receipts rise, saw a 0.3 percent decrease.

The rate of purchases last month was also held back by a

0.5 percent decrease at auto dealers.

The auto figures don’t always line up with industry data, which are the numbers used to calculate GDP. Cars and light trucks sold at an annualized 18.1 million annualized rate in October, about the same as in the prior month. Auto sales so far this year have averaged a 17.3 million rate, on pace for the best year since 2000.

Payroll Gains

Hiring gains are probably a big reason auto demand is holding up. Payroll growth surged in October, with the 271,000 gain exceeding all estimates in a Bloomberg survey of 93 economists. Last month’s advance lifted the monthly average so far in 2015 to 206,000. That compares with a 260,000 last year that was the best since 1999.

The household spending that makes up about 70 percent of the economy should hold steady in the final three months of the year, according to the medians of economists’ projections as of Nov. 11. Consumer purchases will rise at a 3 percent annualized pace in the fourth quarter after a 3.2 percent advance in the three months ended September, according to the data compiled by Bloomberg.

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