U.S. retail sales increase broadly; import prices subdued
U.S. retail sales rose broadly in August, which should ease some concerns about consumer spending and support expectations for sturdy growth in the third quarter.
The Commerce Department said on Friday retail sales increased 0.6 percent last month as Americans bought automobiles and a range of other goods after an upwardly revised 0.3 percent gain in July.
“It still paints the consumers muddling along. The general message on the economy is that it’s improving but we still have a lot of slack to take up,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
The increase in retail sales, which account for a third of consumer spending, was in line with economists’ expectations. July’s retail sales were previously reported to have been flat.
So-called core sales, which strip out automobiles, gasoline, building materials and food services, and correspond most closely with the consumer spending component of gross domestic product, increased 0.4 percent in August.
The dollar gained modestly against the yen and euro, and U.S. Treasuries’ prices extended losses after the data. U.S. stock futures were pointing to a slightly weaker open.
August’s increase in core retail sales followed an upwardly revised 0.4 percent gain in July, which was previously reported as a 0.1 percent rise.
Core retail sales were up 4.1 percent in the 12 months through August, well below their pre-recession growth pace of about 5.5 percent.
Strong gains in consumer confidence are yet to translate into robust sales growth.
“There might be some pressure from the lack of real wage growth,” Brown said.
Retail sales are lagging other relatively bullish economic data such as manufacturing, housing and employment, raising concerns growth this quarter could fall below the anticipated 3 percent annual rate.
August’s fairly solid retail sales report and upward revisions to July’s figures should ease some of those fears. The economy grew at a 4.2 percent pace in the second quarter.
In August, receipts at auto dealerships jumped 1.5 percent after advancing 0.6 percent the prior month. While sales at service stations fell 0.8 percent, that reflected declining gasoline prices, which should free up income and support discretionary spending in the months ahead.
Sales at clothing retailers gained 0.3 percent and receipts at sporting goods shops increased 0.9 percent.
Sales at electronics and appliance stores rose 0.7 percent, while receipts at building materials and garden equipment suppliers rebounded 1.4 percent. Sales at non-store retailers, which include online sales, edged up 0.1 percent.
A separate report from the Labor Department showed import prices recorded their biggest drop in nine months in August as a sharp decline in the cost of petroleum products eclipsed rising food prices, keeping imported inflation pressures subdued.
Import prices fell 0.9 percent last month after slipping 0.3 percent in July. In the 12 months through August, prices dropped 0.4 percent.