Us Retail Sales On the Up and Driven by Motoring
August saw American retail sales rise by 0.6% compared with the previous month, bringing the figures, on a yearly basis, up to 5% according US Commerce department.
The majority of this growth arose from an increase in spending on automobiles and healthcare stores with the former up 9.5% from August 2013 whilst healthcare took a healthy chunk itself at an 8.1% rise from last year.
This is an extremely positive indicator for the US economy as retail sales account for around 70% of its makeup and could point to wider growth throughout the economy as a whole. Paul Dales, US economist at Capital Economics, said:
“With further jobs gains, rises in income growth and a loosening in credit conditions in the pipeline, consumption growth should strengthen in the fourth quarter and in to next year too, “
Further good news was garnered when a separate consumer study, produced by the University of Michigan, showed that consumer optimism had risen from 82.5 in August to 84.6 in September on their consumer sentiment index.
With the economy seemingly picking up, conversation about when the Federal Reserve might begin to start raising interest rates has picked up pace with the US central bank next scheduled to meet up on the 16th and 17th of September. Chris Williamson, economist at Markit, said the retail sales figures “add to the likelihood of the first rise in interest rates occurring earlier than mid-2015”.
“Both the official and survey data therefore point to ongoing strong momentum of the US economy in the third quarter, suggesting that the recent slowing in non-farm payroll growth seen in August may prove temporary and that policy makers will be encouraged that further strong job creation will be sustained in coming months,”
The country added 142,000 jobs to its economy last month and is hoping to continue to grow further in the coming ones.