Date
28 July 2017
Overall retail sales barely rose in September thanks to falling gasoline prices which pushed receipts down 3.2 percent. Photo: Bloomberg
Overall retail sales barely rose in September thanks to falling gasoline prices which pushed receipts down 3.2 percent. Photo: Bloomberg

Weak US retail sales, inflation data cloud rate hike outlook

Lackluster September US retail sales and a fall in producer prices to an eight-month low have raised further doubts about whether the Federal Reserve will raise interest rates this year.

The weak reports on Wednesday were the latest suggestion the economy is losing momentum in the face of slowing global growth, a strong dollar, an inventory correction and lower oil prices that are hampering capital spending in the energy sector.

Reuters is reporting job growth braked sharply in the past two months.

“The softness of September’s figures supports our view that the Fed probably isn’t going to hike interest rates until early next year,” said Paul Ashworth, chief US economist at Capital Economics in Toronto.

The Commerce Department said retail sales edged up 0.1 percentin September largely as cheaper gasoline pushed service station receipts down 3.2 percent.

Giving the report a weak tone, sales in August were revised down to show them unchanged instead of rising 0.2 percent.

Retail sales excluding automobiles, gasoline, building materials and food services slipped 0.1 percent last month after a downwardly revised 0.2 percent gain in August.

The economy grew at a 3.9 percent pace in the second quarter.

Some economists, however, cautioned against reading too much into the soft retail sales report, noting discretionary spending remained fairly healthy.

The figures offered more ammunition to Fed chiefs arguing against a liftoff this year. Rates were widely expected to go up this month. 

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