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U.S. retail fell in September



WASHINGTON – US buyers withdrew spending in September, signaling a key support for the US economy this year could be softer amid a broader global economic downturn.

Retail sales – a measure of purchases in stores, restaurants and online – dropped a seasonally adjusted 0.3% in September from a month earlier, the first monthly decline since February, the Commerce Department said Wednesday. Excluding vehicles and gasoline, categories that may be unstable, retail sales in September were flat.

Wednesday's report suggested that consumer spending was less solid, amid concerns that trade tensions are weighing on the global economy and dampening consumer prospects. Consumer spending is the major driver of the US economy, accounting for more than two-thirds of economic output.

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"This morning's report forces eternal optimists to face the possibility that household consumption may be moderated along with a decline in basic conditions,"

Lindsey Piegza,

Stifel chief economist, wrote in a note to clients.

September's decline in retail sales was partly driven by a 0.9% decline in vehicle spending, reflecting a downturn from a strong 1

.9% gain in August. Lower fuel prices weighed sales at gas stations, which fell 0.7%.

Some economists said that the decline in vehicle and gas sales paints a more mixed picture than the decline in the headline for retail sales suggests.

Lower gas prices “are nothing negative for consumers. It's actually positive, ”he said

David Berson,

chief economist at Nationwide.

He noted that unit vehicle sales increased in September, citing figures from Autodata, in contrast to the dollar decline in vehicle sales reflected in Wednesday's report.

Sales at non-retailers – an online retail power of attorney – fell 0.3% in September, the first decline since December 2018, and one that Mr. Berson characterized as rare.

He said he would need to see "a lot more than a month of data, especially a month of data that has all these discrepancies," before he became overly concerned about a decline in consumer spending.

Consumers have been driven by a half-century unemployment low and prices that have risen modestly despite a US-China trade war that only recently showed signs of relief. The National Association of Home Builders said Wednesday that the housing market index rose three points in October to 71 from a revised level of 68 in September, reflecting an increase in confidence in the US home builder.

Retail sales can be unstable month-to-month, and the broader trend this year has shown steady growth. They rose in August by a revised 0.6%, more than previously estimated. Sales increased by 1.5% in the period July to September compared to the previous three months.

Nevertheless, the decline in retail sales in September was followed by recent data which has suggested uncertainties about trade routes in other parts of the global economy. Expenditure on personal consumption – a separate target for US consumer spending – slowed more than expected in August. Production and service sectors in the US and the euro zone have also had a slowdown.

Forecasting firm Macroeconomic Advisers predicted US gross domestic product grew by 1.3% seasonally adjusted annual rate in the third quarter, compared with a 2.0% annual rate in the second quarter and 3.1% pace in the first quarter.

Trey Kraus, owner and president of Carlton's men's and women's apparel in Rehoboth Beach, Del., Said he raised prices on almost every item in his store because of US tariffs on Chinese imports. The store has exclusive clothing, and Mr. Kraus said the higher prices have deterred some of his customers from buying multiple items at once.

"Although our business has gone up year over year, without [price] increasing, I would have expected five to 10% more volume than we are experiencing," Kraus said.

Still, he characterized the store's foot traffic as strong and said he has an optimistic view of the first quarter of 2020. [19659002] "I think consumer confidence is still high despite much of the news that is out there," he said. "I don't know what the statistics say, but that's what I'm experiencing. "

Write to Amara Omeokwe at amara.omeokwe@wsj.com

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