© Reuters. FILE PHOTO: A sale sign welcomes shoppers at a retail store in Carlsbad, California, U.S., May 25, 2023. REUTERS/Mike Blake/File Photo
By Lucia Mutikani
WASHINGTON (Reuters) – U.S. retail sales rose more than expected in August as a rise in gasoline prices boosted revenue at gas stations, but the trend in underlying goods spending slowed as Americans struggled with high inflation.
Thursday’s report from the Commerce Department also showed that goods spending in July was not as robust as initially thought. However, the data did not change expectations for solid growth in overall consumer spending this quarter, as more money was shown to be spent on services such as concerts, movies and sporting events despite concerns about inflation.
This is unlikely to have an impact on near-term monetary policy as the Federal Reserve is expected to leave interest rates unchanged next Wednesday.
“The economy is doing well right now, with moderate consumer demand not high enough to revive inflation,” said Christopher Rupkey, chief economist at FWDBONDS in New York.
Retail sales rose 0.6% last month. July data was revised downward to show a 0.5% increase in sales, instead of the 0.7% previously reported. Economists polled by Reuters had forecast a 0.2% rise in retail sales. Retail sales are predominantly goods that are not adjusted for inflation. They rose by 2.5% year-on-year.
Revenue at gas stations rose again by 5.2% after a decline
10.3% in July. According to the US Energy Information Administration, gasoline prices rose sharply in August, reaching their highest level this year at $3,984 per gallon in the third week of the month. This compares to $3,676 per gallon during the same period in July.
Higher gasoline prices pushed up producer prices in August, other Labor Department data showed Thursday.
Excluding gas stations, retail sales rose 0.2% last month. The sales value of car dealerships increased by 0.3%. Online sales were flat after rising 1.5% in July. Amazon’s (NASDAQ:) Prime Day promotion in July, its largest on record, and parents starting back-to-school shopping earlier may have led to a surge in spending.
Furniture stores’ revenues fell by 1.0%. However, sales at electronics and home appliance stores rose 0.7%. Sales at clothing stores rose 0.9%. The income of building materials and garden supplies retailers increased by 0.1%.
But consumers spent less money on sporting goods, hobbies, books and musical instruments. Grocery store sales rose, as did department store revenue. Sales at restaurants and drinking establishments, the only service category in the retail sales report, rose 0.3% after rising 0.8% in July. Economists view eating out as a key indicator of household finances.
US stocks opened higher. The dollar rose against a basket of currencies. US Treasury bond prices fell.
Although spending continues to be supported by higher wages due to a tight labor market, the outlook is darkening. Excess savings accumulated during the COVID-19 pandemic continue to be reduced. Credit card balances rose sharply and delinquencies reached their highest level in 11 years in the second quarter, according to recent data from the New York Federal Reserve.
Millions of Americans will resume student loan payments in October. Goldman Sachs estimates that fully resuming payments would represent about $70 billion, or about 0.3% of disposable personal income.
Excluding automobiles, gasoline, building materials and food services, retail sales rose slightly by 0.1% in August. July data was revised downward to show that so-called core retail sales rose 0.7% instead of the 1.0% previously reported.
Core retail sales correspond most closely to the consumer spending component of GDP. Despite subdued core sales in August and the downward revision to July data, high spending on services is expected, which should boost consumption.
Gross domestic product growth estimates for the third quarter are currently 5.6% annualized. The economy grew 2.1% in the April-June quarter.
The resilience of the economy is underlined by the still tight labor market.
A separate report from the Labor Department on Thursday showed initial claims for state jobless benefits rose to a seasonally adjusted 220,000 in the week ended Sept. 9, up from 217,000 the previous week.
Economists had forecast 225,000 claims for last week. Claims for this year are at the lower end of their range of 194,000 to 265,000.
The number of people receiving benefits after an initial week of aid, an indicator of hiring, rose by 4,000 to 1.688 million in the week ended Sept. 2, the claims report showed. The so-called permanent claims remain low by historical standards, a sign that some laid-off workers are experiencing short periods of unemployment.
“The claims data is a reminder that the labor market remains relatively tight,” said Nancy Vanden Houten, senior U.S. economist at Oxford Economics in New York.
Source : www.investing.com