The Middletown Press (Middletown, CT)
Retail sales trail forecasts as apparel, autos decline
U.S. retail sales rose by less than forecast in August following an upwardly revised July gain as purchases of automobiles and clothing fell, suggesting households took a breather from spending.
The value of overall sales climbed 0.1 percent from the prior month after a 0.7 percent increase in July, Commerce Department figures showed Friday. The median forecast of economists surveyed by Bloomberg called for a 0.4 percent gain.
Combined results from July and August indicate support from a strong job market and more after-tax pay during the back-toschool shopping season. While household spending, the biggest part of the economy, continues to drive economic growth this quarter, still-tepid pay gains and higher borrowing costs are among reasons why it’s projected to cool from its second-quarter pace.
With the revisions to July, “the net result is fairly strong spending growth so far” in the quarter, Jim O’Sullivan, chief U.S. economist at High Frequency Economics Ltd., said in a research note.
A separate report Friday from the Federal Reserve showed U.S. factory production rose in August amid broad-based gains that included automakers, providing support for economic growth this quarter.
The retail sales figures aren’t adjusted for price changes. The data indicated that the biggest plunge in clothing prices since 1949 depressed August results, at the same time as higher gasoline costs gave them a boost.
Sales fell 1.7 percent at clothing stores, the biggest drop since February 2017. In contrast, receipts climbed 1.7 percent at filling stations, as Labor Department consumer-price data showed seasonally adjusted gasoline prices increased 3 percent, the most since April.
Estimates for retail sales in the Bloomberg survey ranged from a decline of 0.1 percent to a gain of 0.7 percent.
So-called retail controlgroup sales — which exclude food services, auto dealers, building-materials stores and gasoline stations — advanced 0.1 percent after an upwardly revised 0.8 percent gain. The median estimate was for a 0.4 percent increase.
Sales at auto and parts dealers fell 0.8 percent, the most since February, after decreasing 0.1 percent in the previous month, the Commerce Department data showed. According to industry reports for August, except Ford Motor Co., all major automakers’ sales missed analyst estimates as demand plunged for passenger cars.