Retail Sales Fall for a Third Month in a Row

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Retail sales fell for the third consecutive month in September, data released by the U.S. Commerce Department today show, with the index reading at 50.4. The latest reading was the lowest since January 2015 and reflects a 0.6% decline from August’s level of 51.0.

Sales were still strong compared to last year but lower than expected due to increased competition among retailers and mounting fears about an economic slowdown in China.

“Consumers have a right to be concerned about the economy, even if they’re not showing it in this particular data release,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. “It’s inevitable that we’d see some slowing from such a strong pace of spending.”

Economic indicators for September showed discouraging news, with a significant decline in durable goods orders, which was quite surprising as it was an increase of 3.4% for the previous month and the first decrease since November 2014.

The release also showed that inventories increased 0.1% instead of rising 0.5%, as estimated on August 28 by the prior report and personal income increased 0.1%, compared with the forecast of a 0.3% drop, which is further proof of a slowing economy.

“The consumer is going to be wondering about whether they should trust their paychecks,” Boris Schlossberg, director of foreign exchange strategy at BK Asset Management LP in New York, told Bloomberg Radio. “If you’re getting some sort of true or perceived slowdown in the economy, then that’s going to affect how much money people are willing to spend.”

Among other potential factors for consumers’ hesitation is low oil prices. Oil fell below $45 a barrel last month for the first time since 2009 and this has impacted businesses which are dependent on it.

“Until we see some more stability in gas prices, I think it’s going to be a headwind,” Feroli said. “You’re seeing that in some of the data releases already.”

Consumer spending is about 70% of U.S. economic activity, according to Federal Reserve Board of Governors data, and therefore largely determines growth.

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