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Retail Sales: Solid But Decelerating Core Gains

October 14, 2022
Bottom Line:   Retail sales were flat at the headline level in September due to lower gasoline prices, but core sales rose as expected. Additionally, there were modest upward revisions to August data. At the headline level, autos and parts remained slow with the six months that ended in September contracting at a 1.5% annualized pace after running at 5.5% in the prior 12 months and nearly 9% in 2021. Core retail sales through September were growing at an annualized pace of 4.5%, a still solid pace but notably decelerating relative to the six- and 12-month pace of 7+%. Nonstore (online) sales remain the biggest core category at nearly a fifth of core and show positive real growth, despite historic inflation. Home furnishing stores, building, and garden supply stores, and miscellaneous retailers saw slower sales in September as the share slowdown in housing hit those sectors. Overall, consumption remains a smaller but still positive source of real GDP growth as wage gains, and strong household balance sheets allow consumers to spend despite high inflation.
Retail Sales FELL by 0.0% in September,  compared with the market consensus for an increase of 0.2%.       The August estimate was revised from 0.29% to 0.42%. Retail sales are now 8.2% ABOVE their year-ago level; just a year ago, the year-over-year growth rate was 14.5%. Spending at motor vehicle dealers fell by 0.4%.
 
Core Retail Sales
ROSE by 0.1%, compared with the market consensus for a decrease of 0.1%. The August estimate was revised from -0.26% to -0.11%. Core retail sales are now 8.9% ABOVE their year-ago level; just a year ago, the year-over-year growth rate was 15.9%.

In September, gains at nonstore retailers (+0.5%), general merchandise stores (+0.7%), grocery stores (+0.4%), health and personal care (+0.5%). were partially offset by declines in gasoline stations, primarily due to low gasoline prices (-1.4%), miscellaneous retailers (-2.5%), building materials (-0.4%), and furniture & home furnishing (-0.7%).
 
Core Retail Sales ex Gasoline
ROSE by 0.28% and are now 7.5% ABOVE their year-ago level; just a year ago, the year-over-year growth rate was a solid 13.6%.
Article by Contingent Macro