Texas chain­store mas­sacre as Har­vey bat­ters retail sales

Irish Independent - - BUSINESS - Lu­cia Mu­tikani

US retail sales un­ex­pect­edly fell in Au­gust and in­dus­trial out­put recorded its big­gest drop since 2009 as Hur­ri­cane Har­vey dis­rupted ac­tiv­ity, sug­gest­ing the storm could dent eco­nomic growth in the third quar­ter.

The storm, which lashed Texas in the last week of Au­gust, also has im­pacted the labour mar­ket. Econ­o­mists, how­ever, ex­pect a re­bound in the fourth quar­ter.

“Har­vey’s fin­ger­prints were all over the Au­gust retail sales and in­dus­trial pro­duc­tion re­ports this morn­ing,” said Scott An­der­son, chief econ­o­mist at Bank of the West, San Fran­cisco.

The Com­merce De­part­ment said retail sales dropped 0.2pc last month, the big­gest de­cline in six months. While Har­vey weighed on sales in Au­gust, data for July and June were re­vised down. Econ­o­mists had fore­cast retail sales nudg­ing up 0.1pc.

Mo­tor ve­hi­cle sales tum­bled 1.6pc last month, the big­gest drop since Jan­uary, af­ter be­ing un­changed in July. Har­vey, which un­leashed un­prece­dented flood­ing in Hous­ton, prob­a­bly cut into sales of cars.

Auto sales are ex­pected to get a boost from the re­place­ment of flood-dam­aged ve­hi­cles. Over­all retail sales rose 3.2pc in Au­gust on a year-on-year ba­sis, point­ing to un­der­ly­ing strength in do­mes­tic de­mand.

The US Com­merce De­part­ment said while it could not iso­late the im­pact of Har­vey on retail sales, it had re­ceived indi­ca­tions from com­pa­nies that the hur­ri­cane had “both pos­i­tive and neg­a­tive ef­fects on their sales data while oth­ers in­di­cated they were not im­pacted at all.”

Ex­clud­ing cars, petrol, build­ing ma­te­ri­als and food­ser­vices, retail sales fell 0.2pc last month af­ter an un­re­vised 0.6pc in­crease in July. These so-called core retail sales cor­re­spond most closely with the con­sumer spend­ing com­po­nent of gross do­mes­tic prod­uct. Last month’s drop sug­gested con­sumer spend­ing could slow in the third quar­ter.

In a sep­a­rate re­port yes­ter­day, the Fed­eral Re­serve said in­dus­trial pro­duc­tion fell 0.9pc in Au­gust. That was the big­gest drop since May 2009 and fol­lowed six straight monthly gains.

The Fed at­trib­uted about 0.75 per­cent­age point of the de­cline to storm ef­fects that “tem­po­rar­ily cur­tailed drilling, ser­vic­ing, and ex­trac­tion ac­tiv­ity for oil and nat­u­ral gas”.

US stocks were largely flat in morn­ing trad­ing while prices of US Trea­suries were weaker. The dol­lar fell against a bas­ket of cur­ren­cies.

The weak retail sales and in­dus­trial out­put re­ports will prob­a­bly do lit­tle to change ex­pec­ta­tions that the Fed will an­nounce a plan to start shrink­ing its $4.2 tril­lion port­fo­lio of Trea­sury bonds and mort­gage-backed se­cu­ri­ties at its Septem­ber 19-20 pol­icy meet­ing. (Reuters)

Res­cuers in a boat move down a street cov­ered in flood­wa­ters from Hur­ri­cane Har­vey in Texas

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