The U.S. Commerce Department reported Friday that retail and food-services sales advanced 1.9% in September to $549.3 billion, exceeding expectations for a 0.8% increase. Last month's increase followed a 0.6% increase in August.

Before digging into the results, please note that there will be no Daily Rundown today but Jim will be back on Monday!

On a monthly basis, excluding auto sales (which because of their high ticket price can result in volatile monthly readings), retail sales were up 1.5%, also exceeding expectations for a 0.4% monthly gain. Excluding autos and gas, sales were also up 1.5 % in September, again exceeding expectations for a 0.45% advance.

Core retail sales (i.e., retail sales excluding receipts from auto dealers, building materials retailers, gas stations, office supply stores, mobile homes and tobacco stores) were up 1.4% in September, also beating expectations for a 0.2% advance. While this group is not considered to have as big an impact on trading as the headline number unless there is significant deviation from expectations, we note the results because it is also what is known as the "control" group and is closely associated with personal consumption expenditure (PCE), which is a large portion of the gross domestic product (GDP).

Digging deeper, the report also shows:

  • Clothing and clothing accessory stores sales: +11.0% MoM and -12.5% YoY
  • Department Stores sales: +9.7% MoM and -7.3% YoY
  • Sporting goods, hobby, musical instrument & book stores sales: +5.7% MoM and +14.4% YoY
  • Motor vehicle & parts dealers sales: +3.6% MoM and +10.9% YoY
  • Food services & drinking places sales: +2.1% MoM and -14.4% YoY
  • General-merchandise stores sales: +1.8% MoM and +4.3% YoY
  • Health & personal care stores sales: +1.7% MoM and +5.3% YoY
  • Gas stations sales: +1.5% MoM and -13.3% YoY
  • Miscellaneous store retailers sales: +1.1% MoM and +3.6% YoY
  • Building material & garden equipment & supplies dealers sales: +0.6% MoM and +19.1% YoY
  • Furniture & home furniture stores sales: +0.5% MoM and +4.6% YoY
  • Non-store retailers (i.e., e-commerce) sales: +0.5% MoM and +23.8% YoY
  • Grocery store sales: +0.1% MoM and +9.6% YoY
  • Food & beverage stores sales: 0.0% MoM and +10.5% YoY
  • Electronics & appliance stores sales: -1.6% MoM and -6.4% YoY

All in, this was a solid reading that points a continued recovery of the U.S. economy. That said, while we are on the right path, we remain cautiously optimistic as we acknowledge that although the economy is trending in the right direction, there are several headwinds we must still contend with including a second wave of coronavirus infections, the fact that many jobs are permanently lost (~4 million according the recent Goldman Sachs earnings call) and of course the U.S. election.

Members interested in digging even deeper can view the report's official release here. As members go through the data, we encourage you to consider both the short-term (MoM) and longer-term (YoY) dynamics at play in the industries in which you are invested - for example, the trend seen at non-store retailers does point to incredibly strong e-commerce over the past year, however, it appears to be decelerating, a dynamic that makes sense as brick and mortar locations open back up.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no position in the stocks mentioned.