U.S. Retail Sales Surge 0.4% in September, Led by E-Commerce Growth

U.S. Retail and Food Services Sales Rise in September 2024

In September 2024, U.S. retail and food services sales reached $714.4 billion, reflecting a 0.4% increase from the previous month, according to advance estimates from the Census Bureau. This marks a 1.7% increase compared to September 2023, signaling steady consumer demand. Notably, total sales for the July to September period were 2.3% higher than the same period in 2023. The data, adjusted for seasonal factors but not price changes, suggests resilience in consumer spending despite broader economic concerns.

Retail trade sales alone saw a 0.3% monthly increase and a 1.4% rise year-over-year. Nonstore retailers, driven by e-commerce growth, posted a robust 7.1% annual gain, while food services and drinking places increased by 3.7%. These gains suggest strength in online shopping and dining out, although inflation and high interest rates remain potential challenges for consumer spending moving forward.

October 2024 Manufacturing Activity Expands

The October 2024 Manufacturing Business Outlook Survey indicated that manufacturing activity in the region expanded, with key indicators for general activity, new orders, and shipments rising after a downturn in September. The general activity index improved from 1.7 to 10.3, and both the new orders and shipments indices returned to positive territory, signaling renewed demand.

However, the employment index dropped to -2.2, indicating mostly stable hiring but a slight increase in firms reporting declines in employment. Additionally, price pressures eased somewhat, as both the prices paid and prices received indices fell, though they remain positive. Input costs continue to rise, albeit at a slower pace, indicating persistent inflationary pressures within the sector.

Outlook for the Next Six Months: Optimism Prevails

Looking ahead, manufacturers remain optimistic about the next six months. The future general activity index surged to 36.7, with nearly half of the firms expecting increased activity. Expectations for new orders and shipments reached their highest levels since spring 2024, and firms also anticipate higher employment levels, as indicated by a rise in the future employment index.

Notably, capital expenditure plans suggest stronger investment in 2025. Over 50% of firms plan to increase spending on hardware, software, and energy-efficient technologies. However, spending on structures may decrease. This optimism reflects broader expectations of sustained growth despite current challenges.

Market Forecast

Overall, the retail and manufacturing data reflect a cautious but steady economic recovery. The retail sector’s resilience, especially in online sales and food services, coupled with expanding manufacturing activity, points to moderate economic growth. However, inflationary pressures and cautious employment trends in manufacturing may temper growth prospects.