Announced this morning, Retail Sales increased 0.4% in September, more than expected and higher than the previous month’s revised increase. Monthly sales for Clothing & Accessories Stores, up 1.5%, and Health & Personal Care Stores, up 1.0%, were strong while monthly sales at Electronics & Appliance stores, down -3.3%, and Gasoline Stations, down -1.6%, were relatively weak. The Control Group, which is a closer measure of the inputs for GDP that excludes sales for food, autos, building materials, and gas stations, increased 0.7% in September, much higher than expected and above the revised level from the previous month.
Meanwhile, Initial Jobless Claims were 241,000 for the week ending October 12th, less than expected and 19,000 less than the previous week. Claims are still elevated from previous levels in part due to the aftermath of hurricanes Helene and Milton.
Overall, headline retail sales and the control group increased more than estimated in September, with strength in clothing and personal care stores. Furthermore, the substantial increase in the control group suggests strength for the economy given consumption’s heavy weight, 68%, in GDP. Consumers continue to spend in the current environment, although they remain a bit selective in their purchases as noted in recent company commentaries.
Jobless claims were less than expected but remain elevated for the second straight week due to post hurricane effects. While still below the 300,000 level considered appropriate for the economy, it remains to be seen if the recent increases will normalize in the weeks ahead, especially as Boeing recently announced layoffs. As long as jobs are still available and people spend money, the economy should be stable as we work through the current earnings season.
In all, the 10-year US treasury yield moves higher following the report and equity futures are also higher as we head into the market open.
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