Shoppers spent more than expected at retailers, bars and restaurants in September in a possible sign that cooling inflation is encouraging price-wary consumers to spend.
Retail and food services sales grew 0.4% in September from the previous month, according to advance estimates reported Oct. 17 by the US Census Bureau. This was an acceleration from a revised 0.1% monthly gain in August and beat economist expectations of a 0.3% rise in September, according to estimates compiled by Econoday.
"Coming off the worst inflationary burst in decades, consumers are still feeling the pinch and adjusting to higher prices, despite considerable easing in the pace of increases over the past year," said Jim Baird, chief investment officer with Plante Moran Financial Advisors, in an Oct. 17 note. "Nonetheless, a return to relative price stability and lower interest rates over time should help to reinvigorate sentiment, as long as the economy stays on a solid growth trajectory and labor conditions remain constructive."
Meanwhile, default risk for retailers ticked down in the roughly a month ending Oct. 17. Retailers stayed out of bankruptcy court during the same period.
Sales
Total retail and food services sales hit $714.36 billion in September, according to seasonally adjusted Census Bureau data. Through the first nine months of the year, consumers have spent $6.280 trillion at retailers, up 2.6% from the same period in 2023.
Among retail industries, miscellaneous store retailers — a category that includes specialty shops and auctions — reported the highest monthly growth at 4%. The category also reported the highest annual growth at 7.9% compared with September 2023.
Clothing and clothing accessory stores and health and personal care stores reported the next-highest monthly growth at 1.5% and 1.1%, respectively.
Electronics and appliance stores fell the most on a monthly basis, declining 3.3% in September. Gasoline station sales, which fell 1.6% month over month, dropped 10.7% on an annual basis as the average price of a gallon of gasoline at retail was nearly 16% lower in September than the same month in 2023, according to US government data.
Default risk
The median default risk for publicly traded retailers fell to 2.1% on Oct. 17 from 2.4% on Sept. 16, according to S&P Global Market Intelligence data. The scores represent the median odds of default on debt within a year and are based primarily on the volatility of share prices for public companies on major US exchanges, accounting for country- and industry-related risks and other macroeconomic factors.
Median probability of default scores dropped across most retail sectors during the period, with rises recorded in personal care products, household appliances, broadline retail, leisure products and food retail.
Bankruptcies
Market Intelligence recorded no new filings of public and certain private companies in retail industries in the approximate month ending Oct. 17. The year-to-date total remained at 26 bankruptcies, flat from 2023 but above comparable figures in the prior two years.
