Retail sales rose 0.7% in September

Home News Retail sales rose 0.7% in September

Oct. 15, 2021—A newly released report from the U.S. Commerce Department showed retail sales rose 0.7% in September. Some of the categories that accounted for the bulk of sales included: retail and food service establishments; motor vehicle dealerships; furniture and home improvement stores; and building materials and supplies dealers.

The positive sales growth is noteworthy during a time when the nation’s supply chain is facing major disruptions due to port congestion and delays in offshore deliveries. However, those delays have resulted in higher costs for products across a variety of markets and industries—increases that are reflected in the retail price of many products. Analysts say this distorts the retail growth numbers because of inflation.

“Retail sales—unlike other categories—are not adjusted for inflation,” said Jill Schlesinger, CBS News business analyst. Inflation, which is up 5.4% from last year, reflects sharply higher prices for several key categories, including food and energy, she noted.

Prices for household furniture, which has faced major shipping delays, jumped 2.4% in September—the biggest increase since 1988. Over the past 12 months, furniture costs have soared 11.2%, the most since 1951.

New cars are growing increasingly expensive with costs rising 1.3% in September, and 8.7% compared with a year ago. That is the biggest 12-month increase in new car prices since 1980. A shortage of semiconductors has restrained vehicle production and left fewer cars on dealer lots.

Clothing prices fell 1.1% in September, providing consumers some relief after increases earlier this year.

Floor covering stores—many of which have reported robust sales over the course of the pandemic—continue to post gains despite delays in shipments on some imported products. However, many specialty retailers maintain a positive outlook on the business.

Economists polled by Reuters had forecast retail sales would slip 0.2% last month. They cited an ongoing global shortage of microchips, which is forcing automakers to cut production, leading to a scarcity of inventory at showrooms. That has resulted in higher prices and limited choices for buyers.

“The September retail sales report reflects both consumer resilience and escalating prices,” said Sal Guatieri, a senior economist at BMO Capital Markets. “The main concern now is that supply-chain disruptions and microchip shortages appear to be spreading, limiting selection and tamping down goods demand.”

Earlier this week President Joe Biden announced that the Port of Los Angeles would join the Port of Long Beach—two of the country’s busiest—in expanding round-the-clock operations to unload an estimated 500,000 containers on cargo ships offshore.

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