August retail sales were healthy and point to moderately strong third quarter GDP growth

The consumer sector appears to be stronger than indicated by employment data. The consumer is out spending. Retail sales jumped 0.6 percent in August after a rise of 0.3 percent the month before. Analysts projected 0.6 percent for August. The July upward revision was significant-previous estimate of zero.

Excluding autos, sales gained 0.3 percent in both August and July, matching expectations. Excluding both autos and gasoline sales were quite healthy, increasing 0.5 percent, following a rise of 0.3 percent in July. Expectations were for 0.4 percent.

By detail, not surprisingly, motor vehicles increased 1.5 percent. Next, building materials & garden equipment gained 1.4 percent-suggesting some improvement in housing. Food services & drinking places sales were up 0.6 percent, showing healthy improvement in discretionary spending. This is a good sign for the consumer sector.

Weakness was led by a 0.8 percent decline in gasoline sales. Also, general merchandise dipped 0.1 percent.

Overall, August retail sales were healthy and point to moderately strong third quarter GDP growth. Economic news has oscillated in recent months but consumer spending may be suggesting that the economy is stronger than suggested by labor market numbers.