Investors were given a truckload of economic data to sort through on Wednesday, as distraction for this afternoon's main event: the U.S. Federal Reserve's policy decision.
None of the data did much to move the needle regarding the largely expected rate hike.
Receipts at U.S. retailers USRSL=ECI increased by 1.2% in August, marking an abrupt reversal from July's 0.5% dip.
The number breezed past the 0.8% growth analysts expected.
Drilling down, the 3.1% surge at the gasoline pump helped boost the headline, as did a 2.6% jump in the non-store retail segment — which includes online shopping. Department stores were once again a weak spot, dropping 0.8%.
The 1.2% increase in food and drink services suggest consumers continue to spend, despite stubborn inflation.
The "control" figure, which excludes autos, gasoline, building supplies and food services — and is most closely correlated with the personal expenditures element of GDP — jumped by 1.4%, blasting past the 0.4% consensus.
"Given the rebound in retail sales, we are on track for another quarter of solid corporate earnings," writes Jeffrey Roach, chief economist at LPL Financial. "We also expect the Fed will raise rates to address the inflationary pressures coming from the demand side of the economy."
Shifting gears, the cost of goods imported to the United States USIMP=ECI (excluding tariffs) increased by 0.7% last month, per Labor Department data, much hotter than the 0.4% increase economists predicted and rebounding from July's 0.3% drop.
Digging deeper, a 1.2% increase in industrial supplies and a 0.9% rise in capital goods provided much of the upside muscle, with petroleum cost growth posting a nominal 0.1% gain. Year-on-year, the cost of imported petroleum and industrial supplies have risen 27.3% and 17.5%, respectively.
"Rising fuel prices weren’t to blame this time ... with higher non-fuel costs – led by higher costs to fund the AI buildout – exerting upward pressure," says Oren Klachkin, financial market economist at Nationwide. "After today, we’re looking for another 25bps hike (from the Fed) before year-end."
Meanwhile, the cost of U.S. exports rose 0.6%, driven by a 1.3% increase in industrial supplies.
Year-over-year, import prices have risen 7.0%, and export prices have gained 8.6%.
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