The US consumer once again displayed resilience this week as fresh data came in on Tuesday regarding retail sales, placing the US even further away from recession. Shoppers were revealed as continuing to spend 0.7% more in the month of September on outings at bars and restaurants and purchases of motor vehicles. Economists had previously forecast a lower jump in sales growth, owing to data showing that people had been using their credit cards less last month. However, this new information may give the Fed food for thought when they consider whether to hike interest rates again at their next meet up.
Strength in the US economy was also illustrated this week when industrial production ticked up past expectations. Output grew by 0.3% month on month in September, with manufacturing rising 0.4% and vehicle production rising 0.3% – stifled somewhat due to continuing strikes amongst automakers. Given that the market originally priced in no change in production, and despite the fact that manufacturing has slowed due to inflation rates dampening demand for goods, the data shows the US’ momentum is rolling on this year at an impressive pace.
The UK’s inflation rate revealed that prices continued to increase at the same pace as the preceding month. Headline inflation remained steady at 6.7% in September, matching August’s rate. The cost of petrol and diesel played a role in sustaining inflation, while prices for food and non-alcoholic beverages experienced their first decline since September 2021. Additionally, the prices of household appliances and airfares decreased. Tuesday’s data revealed that average wages are rising faster than prices for the first time in nearly two years. The government has set a goal to bring the primary inflation rate down to 5% by year-end, with a longer-term target of 2%. With this in mind, the Bank of England may not change interest rates in November, which currently stand at 5.25%.