An upward revision to a very strong July offsets an unexpectedly flat
August to make for a solid pace so far in third-quarter consumer
spending. Retail sales inched only 0.1 percent ahead in August to come
in below Econoday's consensus range. The plus in the report is a 2
tenths upward revision to July which now stands at a 0.7 percent gain.
Weakness
in August is tied to motor vehicles where sales fell 0.8 percent
following 0.1 percent declines in the prior two months in what is a very
poor run for the auto industry. Apparel stores have been up and down
and were very down in August at a 1.7 percent decline. Department stores
have also been up and down and were also down in August, falling 1.0
percent. Sales at furniture stores have been soft, sinking 0.3 percent
in the month, as have sales of building materials in what together are
more negative indications for residential investment.
Positives
include another strong gain for nonstore retailers, up 0.7 percent as
e-commerce continues to muscle out gains. Sales at gas stations,
reflecting higher pump prices and also strong driving demand, rose 1.7
percent. Restaurants, which have been very strong, pulled out another
monthly gain though a small one at 0.2 percent.
August was a soft
month but looking at year-on-year rates helps confirm underlying
strength. Total retail sales rose 6.6 percent in August, little changed
from July's 6.7 percent. And leading the sector are nonstore retailers
at 10.4 percent followed by an outstanding showing for restaurants, at
10.1 percent in a gain that underscores the fundamental health and
spirit of the consumer.
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