- A key measure of consumer spending unexpectedly dropped for the first time in seven months in September.
- The Commerce Department saidWednesday retail sales fell 0.3% last month, compared with a 0.6% rise in August.
- Consumer spending accounts for more than two-thirds of economic output.
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A key measure of consumer spending unexpectedly dropped for the first time in seven months in September, raising concerns about one of the brightest spots in the US economy.
The Commerce Department saidWednesday retail sales fell 0.3% last month, the first decline since February and compared with a 0.6% rise in August. Retail sales account for more than two-thirds of economic output.
Consumer activity, along with hiring, has propelled an economy that has been otherwise roiled by a trade dispute between the Trump administration and China.
The US expanded tariffs to more than $US100 billion worth of additional imports from China at the start of September, a move that targeted mostly consumer products and rattled financial markets. The two sides reached a partial agreement to defuse tensions on Friday, while steep import taxes were expected to remain in place on thousands of products.
But retail sales data can be volatile from month to month, and economists predicted that the September drop in retail sales could be revised upward. Hiring posted softer gains in recent months, but the economy has continued to create jobs at a solid pace.
“No need to panic yet,” said Ryan Sweet, an economist at Moody’s Analytics. “Fundamentals remain supportive for consumer spending as the labour market is strong, wage growth is decent and household debt service burdens are low.”
A decline in auto sector receipts pulled retail sales lower in September. Excluding car sales, retail sales fell 0.1% in September.
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