October 14, 2015 8:40 AM, EDT

Retail Sales Rise Less Than Expected as Americans Save More

Luke Sharrett/Bloomberg News

Consumers in the United States tempered purchases at retailers in September, pocketing the savings from lower fuel costs and making for a weak finish to the third quarter.

The 0.1% gain followed little change in the prior month that was weaker than previously reported, Commerce Department figures showed Oct. 14 in Washington. The median forecast of 82 economists surveyed by Bloomberg News called for a 0.2% advance. More than half of merchant categories showed decreases.

Sluggish sales may raise concern about whether the staying power of consumer spending, which accounts for about 70% of the economy, at a time overseas demand is also cooling. While job gains and cheap fuel may help to underpin purchases, a pickup in wages remains elusive as Federal Reserve policymakers are weighing whether to raise interest rates this year.

“Consumption has been a strong pillar of growth over the summer, but this pillar is probably more fragile than previously expected,” said Thomas Costerg, a senior U.S. economist at Standard Chartered Bank in New York. “Consumers would like to see more wage growth before spending a bit more freely.”

Estimates in the Bloomberg survey for total retail sales ranged from a drop of 0.2% to a 0.6% gain. The August tally was previously reported as a 0.2% increase.

Seven of 13 major categories showed declines, led by a 3.2% plunge at service stations as fuel costs retreated. The drop was the biggest since January. The Commerce Department’s sales data aren’t adjusted for changes in prices.

A separate report from the Labor Department showed falling energy costs damped wholesale inflation. The producer price index decreased 0.5%, the most since January.

While lower fuel costs depress filling-station receipts, they remain a tailwind for consumers. Regular gasoline at the pump was about $2.30 a gallon this week, or 50 cents lower than the year’s high in mid-June, according to AAA, the biggest U.S. auto group.

Turmoil in financial markets may be prompting consumers to put some of those savings in the bank rather than spending it at the mall. In addition to service stations, the Commerce Department’s report showed electronics stores, building-material dealers, grocery stores and online merchants saw purchases retreat last month.

Warmer-than-usual weather in mid-September probably curtailed purchases of fall clothing, and there may have also been some payback for unusually strong grocery-store sales in the prior month, Ted Wieseman, an economist at Morgan Stanley, wrote in an Oct. 9 note. In addition, weaker sales data would come “in the wake of sluggish employment reports the past two months and softening in some consumer confidence gauges,” he said.

Data for September showed hiring has eased. Employers added 142,000 workers to payrolls last month, and revisions trimmed the job count by a total of 59,000 from the prior two months. Wages stagnated, with average hourly earnings falling by a penny from August and rising 2.2% from a year earlier. They’ve been in the 2% range since the expansion began in 2009.

Auto dealers remained a bright spot, with sales rising 1.7% in September, the biggest advance since May.

Industry data from Ward’s Automotive Group showed sales of cars and light trucks climbed at a 18.1 million annualized rate in September, the best in a decade, after a 17.7 million pace the prior month.

Retail sales excluding autos decreased 0.3%, the biggest decline since January, according to the Commerce Department data. They were projected to fall 0.1%, according to the Bloomberg survey median.

The figures used to calculate gross domestic product, which exclude categories such as food services, auto dealers, home-improvement stores and service stations, showed a 0.1% decline after the prior month’s 0.2% increase in the so-called retail control group. The August advance was half as large as previously projected.

Fed policymakers are watching economic data for signs that headwinds such as cooling overseas markets are spilling over and pose a risk to the U.S. expansion.

“Participants noted that ongoing gains in employment and real income were providing support for the rise in spending, and this support was expected to continue going forward,” according to minutes of the central bank’s September meeting released on Oct. 8.

Contacts in various Fed districts “were generally optimistic about the outlook, although retail sales appeared to be softening in a few areas where economic activity was adversely affected by declines in the energy sector and the increase in the foreign exchange value of the dollar,” the minutes said.

A downside miss in retail sales “will exacerbate concerns that the negative feedback mechanism is stronger than many forecasters currently anticipate,” Carl Riccadonna, chief U.S. economist at Bloomberg Intelligence in New York, said in a research note before the report.