The drop in retail sales was partly due to a pullback in sales by motor vehicle and parts dealers, which fell by 0.9 percent in August after jumping by 1.7 percent in July.
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7 a.m.: This article was updated to add that retail sales were expected to fall only 0.1% in August.
The unexpected drop in USA retail sales in August across so many categories is a bummer after an encouraging report from the Census Bureau earlier this week indicating the largest gains in employment and household income since 2007 – growth that should bode well for consumer spending, the us economy’s main driver.
Stanley noted that the decline in retail sales might reflect some pre-presidential election doldrums and that sales reports in the next few months will be critical to monitor.
There was a small upward revision to the July headline data and overall sales increased 1.9% from August 2015 with the 3-month annual gain at 2.4%. Consumer spending, which makes up two-thirds of USA economic activity, is a closely watched barometer of economic health. Economists had expected ex-auto sales to rise by 0.3 percent. Spending on building material and furniture dipped, even though home sales have been solid in recent months.
The strongest performing sector year-over-year was by far non-store retailers – primarily e-commerce and catalog businesses – which saw a 10.9% sales increase.
Sales at grocery stores rose 0.4% in August, and restaurant and bar sales rose 0.9%.
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Retail sales, however, largely don’t track spending on services, which accounts for two-thirds of consumer outlays. And monthly job gains have been averaging averaged 232,000 since June, an indication that many employers expect growth to pick up in coming months. The median household income jumped 5.2 percent a year ago to an inflation-adjusted level of $56,516, the Census Bureau said Tuesday.
