Market Outlook - Retails sales growth disappoints but at least prices were somewhat benign.

In September ( delayed report due to the shutdown) retail sales in the US rose at 0.2% V 0.4% expected. Overall nominal spending on goods, restaurant food and bar tabs rose for the 4th consecutive month but at an underwhelming  0.2%.

However, control group sales, used for refining GDP estimates, fell for the first time since April of 2025, characterized by analysts as cautiousness amongst consumers due to job security anxiety.  We have seen the economy lose jobs in 2 out of the three prior months and higher layoffs from reports from Challenger indicating a slowdown in the labor market during summer and late summer. 

Even the Fed beige book surveys suggested that there was precious little in hiring to write home about and I’m not surprised that spending is cautious.

Still eight of 13 categories in the retail sales report showed a gain for September.

Spending at food and drinking places, the only services sector category, rose 0.7%.

Regarding prices, the September Producer Price Index (PPI), a wholesale measure, was subdued, with a 0.3% gain, in line with expectations, and the core PPI, a less volatile measure came in at 0.2% also within expectations. Services indices were flat MoM, with trade services declining surprisingly. 

Taken in conjunction with weaker beige book readings and the lingering effects of a weaker consumer sentiment due to the shutdown, I would chalk this one up for the doves.