U.S.: Strength in consumption, manufacturing, employment

3 min
Dan North
Dan North Senior Economist for North America

Retail sales are running at a solid +4.7% y/y growth rate despite softness in September which may have been caused by Hurricane Florence. Gasoline sales fell -0.8% m/m, but after three months of weakness, auto sales gained +0.8% m/m. The hurricane clearly influenced sales in restaurants and bars, which fell a sharp -1.8% m/m, yet on a y/y basis remain at a very strong +7.1%. “Core” retail sales rose +0.5% m/m to a robust +4.9% y/y rate. Manufacturing remains energetic as industrial production rose to +3.5% y/y, the fastest in over six years. Similarly the Empire State survey reported another month of strength, particularly with new orders. The labor market con­tinues to tighten as job openings grew +18.1% y/y to another record high. The ratio of job openings/unemployed also rose to a new record of 1.14. Price pressures remained modest but above the Fed’s 2% target in September. Consumer price inflation slipped from 2.7% y/y to 2.3%, driven by a -0.5% m/m drop in energy prices. Core inflation remained unchanged at 2.2% y/y. Prices received by producers also eased, growing by 2.6% y/y, down from 3.4% three months ago. Core PPI inflation also fell to 2.5% from 2.8% three months ago.