U.S. consumers unexpectedly pulled back on retail spending for the first time in seven months, reviving fears that a weakening economy could finally be taking its toll on American shoppers just before the pivotal holiday season.

Retail sales dipped 0.3% in September from the month before, the U.S. Commerce Department said Wednesday, as shoppers spent less on automobiles, building materials and sporting goods. Sales at department stores fell 1.5% from the month before, while online shopping slipped by 0.3%.

Retailers, already rattled by President Donald Trump’s trade war with China, are watching closely as they prepare for the all-important holiday shopping season. Recent sales declines signal “an early chill for retailers,” Diane Swonk, chief economist at professional services firm Grant Thornton, wrote in a Wednesday note to clients.

“The consumer is slowing,” she said. “We are looking for a further slowdown in the fourth quarter, but hoping to avoid the panic we saw in December of 2018 when the stock market collapsed and the government was shut down.”

Holiday spending growth slowed to 2.1% last year, the lowest level in nearly a decade, as a government shutdown, stock market volatility and new tariffs on Chinese imports took their toll on consumers. The National Retail Federation is expecting more robust spending this year – it expects holiday sales will grow in the 3.8% to 4.2% range – though it has warned that economic uncertainty, new tariffs and fluctuations in the stock market could negatively affect consumers’ shopping plans in the coming months.

“There has clearly been a slowdown brought on by considerable uncertainty around issues including trade, interest rates, global risk factors and political rhetoric,” Matthew Shay, chief executive of the National Retail Federation, said earlier this month. “Confidence could be eroded by continued deterioration of these and other variables.”


Those declines come amid other signs that businesses and consumers are cutting back: U.S. manufacturing has fallen to its lowest level in more than a decade, and auto sales are contracting after seven years of fast growth. There are also signs that jobs growth is slowing, as businesses pull back on hiring.

In all, consumers spent $525.6 billion in September, down from $526.9 billion in August. Overall retail spending so far this year, however, is up about 3.4% compared to the same period last year.

“September was worse than expected, but growth is still up so far this year,” said Mickey Chadha, a vice president at Moody’s. “Despite slowing growth projections for the remainder of the year, the consumer is still in a pretty strong position.”