Weak US retailing raises fears for the economy

WASHINGTON (Reuters) – US retail fell for the first time in seven months in September, suggesting that production-led weakness could spread to the broader economy and keep the door open for the Federal Reserve to cut interest rates later. this month.

The signs of a consumer spending slowdown reported by the Commerce Department on Wednesday the height of the reports this month that showed a moderation in job growth and activity sector activity in September.

The economy is hampered by a 15-month trade war between the United States and China, which has created a business mood, leading to a fall in capital expenditure and a recession in the industry.

"Weaker retailer figures provide further evidence that manufacturing sector weakness is spreading to other areas of the economy," said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.

Retail sales fell 0.3% last month as households cut spending on motor vehicles, construction products, hobbies and online purchases. That was the first fall since February.

Data for August was revised to show retail sales get 0.6% instead of 0.4% as previously reported. Economists polled by Reuters had predicted that retail sales would rise 0.3% in September. Compared to September last year, retail sales increased by 4.1%.

Excluding cars, gasoline, building materials and food services, retail sales remained unchanged the previous month after a 0.3% increase in August. These so-called core sales are most consistent with consumer spending on gross domestic product.

The fall from last month and August's unannounced core sales gains indicated a much more substantial decline in consumer spending in the third quarter than economists had expected following an increase in the previous quarter.

Consumer spending, which accounts for more than two-thirds of the economy, increased by 4.6% annual rate in the second quarter, most at 1-1 / 2 years. After the release of the data, economists cut their third-quarter consumer spending growth to around 2.5% from a 3.0% pace.

Signs that the economy's growth engine sputtering may further stifle fears in the financial market of a sharp slowdown in economic growth. Some economists speculated that hiring cooling probably made Americans more cautious about using.

"The decline in job growth may begin to affect consumer habits, but we need more data to confirm that idea," said Jennifer Lee, senior economist at BMO Capital Markets in Toronto.

Major U.S. stock indices traded lower while prices for US Treasuries were generally higher. The .DXY dollar was a little weaker against a basket of currencies.

BROAD WEAKNESS

Although President Donald Trump announced a ceasefire in the trade war with China last Friday, which delayed further tariffs due this month, economists say the longest economic expansion on record remained in jeopardy without all import duties was rolled back.

The International Monetary Fund warned Tuesday that the US and China trade wars would cut global growth in 2019 to its slowest pace since the 2008-2009 financial crisis, expressing caution over Trump's so-called Phase 1 trade agreement, saying more details were needed.

Growth is also limited by the fading stimulus from last year's $ 1.5 trillion tax cut package.

As consumer spending declines, a full trade contract still elusive and the likelihood of a disastrous exit from the EU from the UK, many economists expect the Fed to cut interest rates at its October 30-30 political meeting to keep enlargement, now at its 11th. year, on the track.

The US Federal Reserve cut interest rates in September after reducing loan spending in July for the first time since 2008.

"The weakness noted in the retail report will be seen by Federal Reserve politicians as a warning and will be another reason to the Fed to ease monetary policy again at the October meeting, says David Berson, chief economist at Nationwide in Columbus, Ohio.

The Atlanta Fed estimates GDP grew at an annual rate of 1.7% in the third quarter. % in April-June quarter and declined from 3.1% in first quarter.

In addition to weak retail sales, growth estimates for the third quarter could be lowered after another report from the Department of Commerce on Thursday showed that inventories remained unchanged in August after that they rose by 0.3% in July.

The government will publish its snapshot of GDP for the third quarter at the end of the month.

Retail sales in September were weighed down by a 0.9% fall in b It was the biggest fall in eight months and followed an acceleration of 1.9% in August. Receipts at gas stations fell 0.7%, which probably reflects cheaper gasoline.

Sales in electronics and appliance stores were unchanged and received no boost from the launch of Apple's ( AAPL.O ) new iPhone model. Sales in hardware stores fell 1.0%. Online retail and mail order sales fell 0.3%, most since December 2018. This followed a 1.2% increase in August. Spending on hobby, musical instrument and bookstores dipped 0.1%.

But receipts in clothing stores dropped 1.3% last month after falling 0.7% in August. Sales in furniture stores increased 0.6%. Sales of restaurants and bars rose 0.2%.