Retail sales, adjusted for seasonal changes but not adjusted for inflation, were up +0.1% in September, matching sales gains in August, and increasing +4.7% compared to September 2017.   Motor vehicle sales were up +0.8% (+1.1% Y/Y),   while gasoline sales were down by -0.8% (+11.4%), and excluding those two relatively volatile sectors brought overall monthly sales to a 0.0% change for the month and a +5.5% gain for the year. After a +9.8% gain in August, restaurant and bar sales dipped -1.8% for the month, possibly due to the effect of September’s storms in the Carolinas, but gained 7.1% for the year. Sales at sporting goods/hobby/book stores increased +0.7% after a -4.4% drop in August but fell -3.8% for the year. Department stores dropped -0.8% (-1.5% Y/Y), limiting the overall general merchandise increase to +0.3% (+3.6% Y/Y). Nonstore retailers, which include online retailers, grew +1.1% in September after a +10.0% gain in August, and were up +11.4% for the year.

Industrial production increased by +0.3% in September, down from August’s +0.4% rate, with a notice that the rate was estimated to have been held down by less than 0.1% due to the effects of hurricane Florence. On a quarterly basis, the industrial production rate slowed from +5.3% in Q2 to +3.3% in Q3. Energy production slowed in Q3 from +12.9% to +5.1% as oil and gas drilling dropped from +56.1% in Q2 to a -8.0% drop, and consumer energy products swung from a +13.4% increase to a -9.4% drop. However, motor vehicle production reversed Q2’s -14.0% drop to a +18.1% increase, and manufacturing in general grew at +2.8% in Q3 vs. +2.3% for Q2. On a quarterly basis, capacity utilization increased for manufacturing, from +75.5% to +75.8% in Q3, and for mining, from +91.2 to +92.2, but fell for utilities, from +78.9% to 77.6%.

The minutes of September’s Federal Open Market Committee (FOMC) meeting noted that most participants believed the FOMC’s economic projections for real GDP growth and unemployment were accurate, although an increasing number since their previous meeting believed that their projections for the unemployment rate were more uncertain. Also, while most participants felt that inflation predictions were accurate, those that felt they were not accurate believed that inflation would trend higher than projected. A few participants expected that it would become necessary to raise rates above the longer-run neutral rate to a more restrictive rate to curb inflation, while other committee members would only favor a more restrictive stance if there were clear signs of rising inflation and an overheated economy.