U.S. retail sales surged as expected in September
U.S. retail sales surged as expected in September, with a 1.6% headline rise and a 1.0% ex-auto gain, after broad-based upward revisions in July and August that left a steep up-tilt into Q4. For hurricane boosts, autos and parts sales rose 3.6%, gasoline service station sales rose 5.8%, and building material sales rose 2.1%. Analysts raised our Q3 GDP estimate to 3.2% from 3.0%, and analysts still assume a 3.0% growth clip in Q4. Analysts assume a 2.2% (was 1.9%) Q3 growth pace for "real" consumption, followed by 2.6% (was 2.4%) growth in Q4. Analysts assume a 1.0% (was 0.9%) September PCE surge in nominal terms with a 0.5% (was 0.4%) "real" increase, alongside a 0.5% PCE chain price gain that matches the CPI rise. The savings rate should plunge to a 3.0% expansion-low from 3.6% in July and August, versus a 3-year high of 6.3% in October of 2015. The business inventory report later this morning will reveal a 0.7% August sales rise after a 0.3% (was 0.2%) July gain. Today's retail sales data are consistent with a 1.3% business sales surge in next month's September report.