US consumers rein in spending as retail sales fall
Unexpected decline may increase calls for more rate cuts
US retail sales fell unexpectedly for the first time in seven months in September, sparking fears the country’s economic slowdown could be affecting consumer confidence.
The Commerce Department said sales had fallen by 0.3 per cent last month, with motor vehicles, building materials, hobbies and online purchases taking the biggest hit. It was the first decline since February.
Consumer spending has helped prop up the US economy in recent months, with a slowdown in manufacturing, weaker business investment and the 15-month trade war with China leading to gloomy predictions. The retail figures may bolster the case for a third straight Federal Reserve interest rate cut.
The report is the second in recent weeks to suggest a sluggish end to the third quarter of 2019 for the previously buoyant US economy. Earlier in the month, the Labour Department reported that, although unemployment hit a 50-year-low in September, job creation missed economists’ estimates and wage growth was also tepid.
Commenting on the retail figures, Steven Ricchiuto, chief US economist at Mizuho Securities, told Bloomberg: “It’s a surprise relative to expectations, it’s a surprise in the details, (and) it is a bit more uniformly weak than a lot of people expected, including myself.”
Auto dealerships were the biggest losers in September’s figures, with spending on cars down 0.9 per cent, the biggest decline since January.