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U.S. Retail Sales Surprise Again in September

Posted: Wednesday, October 20th, 2021

Estimated Reading Time: 2 minutes

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The U.S. Retail Sales data for September took the market participants by surprise. Consumers spent more than forecast, delivering the second consecutive positive surprise in the Retail Sales data.

Consumer spending sits at the heart of every economic performance. Without solid consumer spending, economic growth is not possible.

During the COVID-19 pandemic, governments and central banks delivered various fiscal and monetary stimulus packages. The name is indicative – packages to stimulate consumers to spend.

Indeed, that was the case in the United States. Retails Sales data for September delivered another positive surprise, as U.S. consumers spent more than the market expected. Instead of a decline by -0.2% MoM, the Retail Sales increased by +0.7% on the month. This is excellent news for the U.S. and global economy because it suggests that the Gross Domestic Product (GDP) estimates will be revised higher in the months ahead.

US Retail Sales

Retail Sales Are Much Higher Than the Pre-Covid Trend

Spending on clothes, sports, food increased by the most in September. While supply constraints and the Delta variant concerns did weigh on spending, the outlook remains robust.

The solid sales report feeds into the GDP and thus suggests stronger economic growth ahead for the largest economy in the world. Moreover, another positive is if we interpret the data in the context of the pre-COVID-19 trend. Retails Sales are now +19% higher than pre-COVID and +11% higher than the pre-COVID trend – staggering numbers by all means.

The monthly Retail Sales report does not create volatility in the currency market, as it is viewed by many as second-tier data. However, it is a leading indicator of economic growth, and thus it matters for the local currency, the U.S. dollar.

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