Retail sales in August came in stronger than economists had anticipated, according to the latest data from the U.S. Census Bureau.
- The advance estimates for retail and food services sales totaled $710.8 billion, reflecting a modest 0.1% increase from July, down from the 1.0% growth seen in July and the fourth-worst month so far this year.
- Year-over-year sales growth also decelerated to 2.1% in August, down from 2.7% in July, tying for the third-worst month this year in terms of annual growth.
The Good and the Bad: August’s rise did surpass economists’ expectations of a 0.2% decline, offering a small but unexpected positive signal for the retail sector.
- However, it’s important to note that retail sales are not adjusted for inflation. When compared to the 0.2% increase in consumer prices for August and the 2.5% year-over-year inflation rate, both the monthly and annual gains in retail sales fell below inflation, indicating that real purchasing power is shrinking.
Up & Down: The August sales data showed mixed performance across various retail categories. Miscellaneous store retailers led the way with a 1.7% sales increase, helping lift the overall topline figure. Online retailers followed closely, posting 1.4% growth, reflecting the continued strength of e-commerce.
- Health and personal care stores saw a more modest 0.4% gain, while sporting goods, hobby, and musical instrument shops edged up by 0.3%.
- On the flip side, sales at gas stations declined by 1.2%, driven by lower gas prices. Furniture and clothing stores also experienced declines, each posting a 0.7% drop in sales.
Looking Ahead: As inflation continues to affect consumer spending power, economists will be watching retail sales data closely for signs of either further deceleration or resilience. With the Federal Reserve maintaining a close eye on inflation trends, retail performance in the coming months will be a key indicator of how households are navigating economic uncertainty.
