A customer during the grand reopening of Century 21 department store on Tuesday, May 16, 2023 in New York, USA.
Stephanie Keith | Bloomberg | Getty Images
The Commerce Department reported on Thursday that consumer spending remained firm in September, underscoring the resilience of the economy, which is getting a boost from the Federal Reserve.
On a seasonally adjusted basis, retail sales rose 0.4% this month, up from an unrevised 0.1% increase in August and better than the 0.3% forecast by Dow Jones, according to Advanced Reports.
Excluding cars, sales rose 0.5%, beating forecasts for growth of just 0.1%. The figures are adjusted for seasonality but not for inflation, which rose 0.2% for the month as measured by the Consumer Price Index.
In other economic news, the U.S. Department of Labor reported that initial jobless claims totaled a seasonally adjusted 241,000 on Thursday, down 19,000 and below expectations of 260,000.
Claims have fallen even after hurricanes Helen and Milton, which devastated the Southeast in recent weeks, causing tens of billions of dollars in damage. According to unadjusted data, applications fell in both Florida and North Carolina after rising sharply last week.
Stock futures were higher after the report was released, while Treasury yields also rose.
Together, the reports show that consumers, who drive about two-thirds of U.S. economic activity, are still spending and that the labor market remains firm after showing signs of weakness throughout the summer.
On the retail front, spending by grocery retailers increased by 4%, as did spending at clothing stores (1.5%) and bars and restaurants (1%). These increases offset a 1.6% decline in gas stations due to lower fuel prices, as well as declines in electronics and appliance stores (-3.3%) and the furniture and home furnishings industry (-1.4%).
The data comes a month after the Fed cut its benchmark borrowing rate by half a percentage point and suggests further rate cuts are likely this year and in 2025.
Policymakers have expressed confidence that inflation is returning to the Fed’s 2% target. However, they expressed concern that the labor market is softening, with employment numbers rising strongly in September and weekly jobless claims rising sharply in the wake of the storm but remaining at comparable levels.
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