NAM Economic Report: Strong Motor Vehicle Spending Lifted Retail Sales in August
Friday, September 20, 2019
Posted by: Alyce Ryan
AICC, through its membership in the Council of Manufacturing Associations, is pleased to present the "Monday Economic Report" from the NATIONAL ASSOCIATION OF MANUFACTURERS (NAM).
By Chad Moutray, Ph.D., CBE – September 16, 2019
NAM Weekly Top-lines:
- Retail sales rose by 0.4 percent in August, increasing for the sixth straight month. Spending was buoyed by solid growth at motor vehicle and parts dealers, which jumped 1.8 percent for the month. Excluding auto sales, retail spending was unchanged in August. Over the past 12 months, retail sales have risen a solid 4.1 percent.
- Retail strength matters because consumer spending has helped to prop up economic growth, enough to offset drags from business investment and net exports. While Americans continued to spend at a healthy pace overall, growth in August was more mixed than we might prefer.
- The Index of Consumer Sentiment from the University of Michigan and Thomson Reuters stabilized in September after falling to its lowest point in nearly three years in August. Americans were somewhat more upbeat in their assessments relative to last month, when consumers were anxious about increased trade policy uncertainties and volatility in financial markets.
- Meanwhile, consumers were more willing to incur credit card debt in July, with revolving credit soaring 11.2 percent for the month, rebounding from a decline of 0.2 percent in June. Total consumer credit outstanding rose 6.8 percent in July, up from 4.0 percent in June.
- Job openings in the manufacturing sector jumped to another all-time high, rising from 515,000 in June to 522,000 in July. This was led by strength in postings from durable goods manufacturers, with openings also increasing to a new record level. These results echo ongoing concerns about the difficulties of finding talent in the tight labor market, which manufacturers continue to cite as their top challenge.
- More importantly, for the 17th straight month, the U.S. economy reported more job openings than the number of people looking for work (6,063,000 in July). That statistic suggests there were roughly 1.15 million more job postings than there were unemployed people to fill them.
- In addition, the number of quits in the economy soared to a new all-time high, rising to 3,592,000 in July. This suggests that there is a lot of churn in the labor market, with more Americans exploring their options. (Manufacturing quits had hit a record level in April, but they have fallen back since then.)
- Consumer and producer prices both edged up 0.1 percent in August. Reduced energy costs helped to keep a lid on inflationary pressures. Overall, price growth has decelerated over the course of the past year, which has been welcome news for consumers and manufacturers. Core producer price inflation rose 1.8 percent year-over-year, for instance. With that said, core consumer prices, which exclude food and energy, have increased 2.4 percent since August 2018, the highest rate since September 2008.
- The Federal Open Market Committee is expected to reduce short-term rates at its meeting on September 17–18 this week. With participants expressing more interest in stimulating economic growth, rather than concern over inflation, the FOMC will build on its rate cut last month.
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