A Mixed Bag for September: October 12 – 16

Retail sales bloomed while manufacturing paused in September. Here are the five things we learned from U.S. economic data released during the week ending October 16.


September was a good month for retail sales. U.S. retail and food services sales jumped 1.9 percent during the month to a seasonally adjusted $549.3 billion. The Census Bureau estimate comes in 5.4 percent ahead of September 2019 levels, with 2020 Q3 sales up 3.6 percent from the same quarter a year earlier. Retail sales through the first nine months of this year were tracking only 0.8 percent behind the pace of the same nine months in 2019, rather impressive given the pandemic. Sales at auto dealers & parts stores surged 3.6 percent while those at gas stations gained 1.5 percent. Net of both, core retail sales rose 1.5 percent in September and 5.9 percent from a year earlier. Sales grew at retailers focused on apparel (+11.0 percent), sporting goods/hobbies (+5.7 percent), health/personal care (+1.7 percent), building materials (+0.6 percent), furniture (+0.5 percent), and groceries (+0.1 percent). Department stores (+9.7 percent) and restaurants/bars (+2.1 percent) also reported sales gains. Only electronics/appliance retailers reported a sales decline (-1.6 percent). Further, nonstore sales at (e.g., internet retailers) increased 0.5 percent in September and were up a whopping 23.8 percent from a year earlier.

Manufacturing output fell for the first time since April. The Federal Reserve reports that manufacturing output declined a seasonally adjusted 0.3 percent in September after having grown 0.4 percent in August. Manufacturing production remained full six percent below year-ago levels. Durable goods production fell 0.5 percent, pulled down by drops for computers, electronic products, and motor vehicles. Nondurable goods production held steady in September. Overall industrial production tumbled 0.6 percent in September after having risen 0.4 percent during the prior month and was 7.3 percent below its year-ago pace. Utilities output slumped 5.6 percent while mining output rebounded 1.7 percent.

Consumer prices grew at a moderate in September. The Bureau of Labor Statistics estimates the Consumer Price Index (CPI) increased a seasonally adjusted 0.2 percent during the month, its smallest advance since May. Energy CPI jumped 0.8 percent, even though gasoline prices slipped 0.1 percent (electricity: +0.9 percent, utility natural gas: +4.2 percent). Food CPI held steady. Net of energy and food, core CPI increased 0.2 percent as prices jumped for used cars/trucks (+6.7 percent), new vehicles (+0.3 percent), and shelter (+0.1 percent). Prices fell 0.5 percent for apparel. Over the past year, CPI has risen 1.4 percent, with core CPI having a 12-month comparable of +1.7 percent.

…while wholesale prices picked up. The Producer Price Index (PPI) for final demand swelled a seasonally adjusted 0.4 percent in September, slightly larger than the prior month’s gain. The Bureau of Labor Statistics reports that PPI has risen by a modest 0.4 percent over the past year. The core wholesale price measure—net of food, energy, and trade services—increased in September by 0.4 percent (its biggest rise since April 2019) and 0.7 percent over the past year. Food PPI rose 1.2 percent (thanks to higher prices for vegetables, beef, and oilseeds), while energy PPI fell 0.3 percent. Wholesale core goods PPI jumped 0.4 percent as prices for iron and steel scrap surged 14.7 percent. Services PPI also gained 0.4 percent during the month.

Small business owner sentiments brightened in October. The Small Business Optimism Index from the National Federation of Independent Business rose 3.8 points during the month to a seasonally adjusted 104.0 (1986=100). This was the measure’s highest reading since February. Nine of ten index components improved in October, including substantial jumps for earnings trends (+13), expectations for the economy (+8), plans to increase inventories (+5), and expected real sales (+5). Per the press release, survey respondents reported “some improvements in foot traffic and sales” but were “uncertain about what will happen in the future.”

Other U.S. economic data released over the past week:

  • Jobless Claims (Week ending October 10, First-Time Claims, seasonally adjusted): 898,000 (+53,000 vs. the previous week, +680,000 vs. the same week a year earlier). 4-week moving average: 866,250 (+301.5% vs. the same week a year earlier).
  • University of Michigan Surveys of Consumers (October 2020-preliminary, Index of Consumer Sentiment (1966Q1=100), seasonally adjusted): 81.2 (vs. September 2020: 80.4, vs. October 2019: 95.5).
  • Import Prices (September 2020, All Imports): +0.3% vs. August 2020, -1.1% vs. September 2019; Nonfuel Imports: +0.6% vs. August 2020, +1.5% vs. September 2019.
  • Export Prices (September 2020, All Imports): +0.6% vs. August 2020, -1.8% vs. September 2019; Nonagricultural Exports: +0.3% vs. August 2020, -2.2% vs. September 2019.
  • Treasury International Capital Flows (August 2020, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$33.6 billion (vs. July 2020: -$26.2 billion, vs. August 2019: -$49.9 billion).

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

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