Northwest Arkansas Democrat-Gazette
Retail sales rise 0.4% in August
Vehicle purchases, online shopping fuel increase, data show
WASHINGTON — U.S. retail sales rose moderately in August, driven higher by a jump in auto buying and healthy online sales, evidence that consumers are still spending enough to support growth.
The Commerce Department said Friday that retail sales increased 0.4% last month, down from a strong 0.8% in July.
The data follow signs that consumer confidence, while still strong, has slipped a bit as the U.S.-China trade war has intensified. U.S. businesses have cut back on their investment and expansion plans amid the trade war’s uncertainty and exports have declined. That has left consumers as a key source of growth.
The economy is still creating jobs, though at a slower pace than last year, and wages are rising at a decent rate, analysts say. That should continue to underpin Americans’ ability to spend.
Retail sales have been strong for most of this year, and most economists have expected sales to slow from that healthy pace.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said consumer spending will likely be healthy through the JulySeptember quarter, but then weaken in the final three months of the year.
“For now, the consumer looks strong, but the outlook is deteriorating as confidence falters in the face of the tariffs and, over the next few months, slowing job gains,” Shepherdson said.
Spending at automobile and parts dealers climbed 1.8% from the previous month, the most since March, after increasing 0.1% in July.
Online sales continued to soar, rising 1.6%, roughly the same amount as in July, when Amazon held its Prime Day.
Home and garden centers reported a 1.4% gain, which may have been partly spurred by preparations for Hurricane Dorian. Sales at sporting goods and health care stores also rose.
There were also signs that consumers have become more cautious.
Sales at restaurants and bars, an indicator of Americans’ discretionary spending, fell 1.2%, the steepest drop in nearly a year. Sales at grocery stores, clothing shops and furniture stores also fell. General merchandise stores, which include chain retailers such as Walmart and Target, reported a 0.3% drop.
Filling-station receipts decreased 0.9%, the report showed, after gasoline prices dropped 3.5% in Thursday’s consumer-price data. The retail figures aren’t adjusted for price changes, so sales could reflect changes in gasoline costs, sales, or both.
Retail sales make up about one-third of consumer spending, with the rest consisting of services such as haircuts and medical care. Consumer spending, in turn, accounts for about 70% of economic activity.
Consumers are still mostly
optimistic about the economy. But the University of Michigan’s consumer sentiment index fell by the most in seven years in August as more Americans worry about the impact of tariffs.
The retail sales report comes as the divide between retail winners and losers is widening.
Big box stores like Target and Walmart, and off-price retailers have been responding faster to shoppers’ increasing shift online by offering better bargains and convenient services like same-day deliveries. But many mall-based clothing chains and department stores continue to suffer weak sales as they struggle to attract shoppers. Many have been saddled with excessive debt and been hurt by overexpansion.
Given this environment, the pace of retail bankruptcies and store closures in the U.S. picked up in the first half of the year, according to a report Wednesday from professional services firm BDO USA LLP. Fourteen retailers filed for bankruptcy during the first half of the year, including
some like Shopko and Charlotte Russe that have liquidated.
So far this year, publicly traded U.S. retailers have announced they will close 8,558 stores and open 3,446, according to global research firm Coresight Research. That compares with 5,844 closures and 3,258 openings in all of 2018. Coresight estimates the store closures could number 12,000 by year-end.
Still, when looking at both private and public companies, for each company closing stores, 5.2 are opening locations, according to IHL Group, a global research firm.
The Old Navy chain announced on Thursday that it will be opening 800 new stores as part of its plan to split from parent company The Gap Inc. The move will nearly double its Old Navy fleet to about 2,000 stores in North America.