Consumers in the U.S. tempered purchases at retailers in September, pocketing the savings from lower fuel costs and making for a weak finish to the third quarter.
The 0.1 percent gain followed little change in the prior month that was weaker than previously reported, Commerce Department figures showed Wednesday in Washington. The median forecast of 82 economists surveyed by Bloomberg called for a 0.2 percent advance. More than half of merchant categories showed decreases.
Sluggish sales may raise concern about whether the staying power of consumer spending, which accounts for about 70 percent of the economy, at a time overseas demand is also cooling. While job gains and cheap fuel may help to underpin purchases, a pickup in wages remains elusive as Federal Reserve policy makers are weighing whether to raise interest rates this year.
“Consumption has been a strong pillar of growth over the summer, but this pillar is probably more fragile than previously expected,” said Thomas Costerg, a senior U.S. economist at Standard Chartered Bank in New York. “Consumers would like to see more wage growth before spending a bit more freely.”
Estimates in the Bloomberg survey for total retail sales ranged from a drop of 0.2 percent to a 0.6 percent gain. The August tally was previously reported as a 0.2 percent increase.
Seven of 13 major categories showed declines, led by a 3.2 percent plunge at service stations as fuel costs retreated. The drop was the biggest since January. The Commerce Department’s sales data aren’t adjusted for changes in prices.
A separate report from the Labor Department showed falling energy costs damped wholesale inflation. The producer price index decreased 0.5 percent, the most since January.
While lower fuel costs depress filling-station receipts, they remain a tailwind for consumers. Regular gasoline at the pump was about $2.30 a gallon this week, or 50 cents lower than the year’s high in mid-June, according to AAA, the biggest U.S. auto group.
Turmoil in financial markets may be prompting consumers to put some of those savings in the bank rather than spending it at the mall. In addition to service stations, the Commerce Department’s report showed electronics stores, building-material dealers, grocery stores and online merchants saw purchases retreat last month.
Warmer-than-usual weather in mid-September probably curtailed purchases of fall clothing, and there may have also been some payback for unusually strong grocery-store sales in the prior month, Ted Wieseman, an economist at Morgan Stanley, wrote in an Oct. 9 note. In addition, weaker sales data would come “in the wake of sluggish employment reports the past two months and softening in some consumer confidence gauges,” he said.