A surprise leap in US Retail Sales and consumer sentiment data helped push US stocks higher in Friday’s trading.
US Retail Sales Soar in September
US Retail sales increased at their fastest rate for three months in September. Whilst market estimates were for a 0.8% increase, the value of overall sales in September increased by 1.9% from the previous month.
August posted a 0.6% increase, as US consumer spending continues to lead a fragile economic recovery.
The retail sales control group – which has a greater impact on U.S. GDP – increased 1.4%, surpassing market expectations for a rise of 0.2%.
US Consumer Sentiment Rises
Shortly after the surprisingly strong US retail sales data, US consumer sentiment data released also showed an unexpected uptick.
The University of Michigan’s Surveys of Consumers reported that its preliminary index reading for October increased to 81.2 from the final September level of 80.4. The latest figures comfortably exceeded analyst’s expectations for a reading of 80.5 and puts the index at its highest level since March this year.
Surveys of Consumers Chief Economist Richard Curtin said:
“Slowing employment growth, the resurgence in COVID-19 infections, and the absence of additional federal relief payments prompted consumers to become more concerned about the current economic conditions,”
“Those concerns were largely offset by continued small gains in economic prospects for the year ahead.”
Richard Curtin
Consumer Outlook and Spending Boosts Stocks
Consumer spending is a key component to the US economy, accounting for 70% of total economic activity. The increase in retail sales and consumer outlook helped investors overlook the recent stimulus uncertainty which helped push stocks lower for three consecutive sessions.
At the time of writing, all three indexes in the US are on track to end the three-day losing streak. The Dow Jones Industrial Average is up 0.67%, the S&P 500 is up 0.39%, whilst the Nasdaq Composite is up a modest 0.16%
