US retail, fuel sales gain in Sept, but Fed chief still worried

15 October 2010 20:03  [Source: ICIS news]

WASHINGTON (ICIS)--US retail sales made strong gains in September and the nation’s consumption of transportation fuels also increased, raising hopes for economic revival, but workers incomes also dipped and Fed Chairman Bernanke expressed new concern on Friday that the recovery is slowing.

The Department of Commerce (DOC) said on Friday that US retail sales rose by a relatively sharp 0.6% in September from August, and that consumer spending last month was more than 7% ahead of September 2009.

That was good news to the National Retail Federation (NRF), which said that the department’s sales data for September “were better than expected”.

“September retail sales show that the economy is continuing to grow, even though it remains at a subpar pace,” said NRF chief economist Jack Kleinhenz.

“Given the stubbornly high unemployment and other challenges that families are facing today, these increases are still quite impressive,” he said. 

Kleinhenz noted that the gain in consumer spending last month was all the more encouraging as retailers prepare for the crucial US holiday shopping season that typically begins in November.

Consumer spending is the principal driving force of the US economy, accounting for as much as 70% of all commercial activity.

The American Petroleum Institute (API) also reported on Friday that September sales of diesel fuels for commercial trucking were up by more than 9% from the same month a year ago.

“The September data suggests a move toward economic recovery,” said API chief economist John Felmy.

Felmy also noted that stronger demand in September for gasoline and jet fuel “point to increased business and consumer confidence”.

In addition, the US Department of Labor (DOL) said on Friday that the consumer price index (CPI) rose by a razor-thin 0.1% in September, further sign that there is little near-term risk of a run of inflation.

Although the US economic recovery began in June 2009 and showed its greatest strength in the fourth quarter last year and the first quarter of 2010, the Labor Department noted that consumer prices have increased by only 1.1% over the past 12 months.

But the department also reported on Friday that real average hourly earnings for all US employees fell by 0.1% in September from August because while wages remained unchanged last month, actual income value was reduced by the slight uptick in the consumer price index.

Those and other recent economic signals left Federal Reserve Board Chairman Ben Bernanke still worried about the ability of the nation’s economy to recover fully.

In a speech to a bankers meeting on Friday in Boston, Massachusetts, Bernanke said he was troubled by the fact that “growth in private final demand having so far proved relatively modest, overall economic growth has been proceeding at a pace that is less vigorous than we would like”.

“In particular, consumer spending has been inhibited by the painfully slow recovery in the labour market, which has restrained growth in wage income and has raised uncertainty about job security and employment prospects,” he said.

“Since June, private-sector employers have added, on net, an average of only about 85,000 workers per month - not enough to bring the unemployment rate down significantly,” he noted.

The US should generate at least 100,000 new jobs each month just to meet new workers entering the economy, and a new-jobs rate of 200,000 per month or more would be needed to begin restoring employment to the some 14m jobless Americans.

Bernanke hinted broadly that at the Fed’s next interest rate-setting meeting on 2-3 November, the central bank would take steps to bring down long-term interest rates in hopes of improving lending for businesses that in turn could stimulate more hiring.

To discuss issues facing the chemical industry go to ICIS connect
Paul Hodges studies key influencers shaping the chemical industry in
Chemicals and the Economy

By: Joe Kamalick
+1 713 525 2653

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index