WASHINGTON, United States — US retail sales increased more than expected in August, pointing to solid consumer spending that should continue to support a moderate pace of economic growth.
The Commerce Department said on Friday retail sales rose 0.4 percent last month, lifted by spending on motor vehicles, building materials, healthcare and hobbies. Data for August was revised slightly up to show retail sales increasing 0.8 percent instead of 0.7 percent as previously reported.
Economists polled by Reuters had forecast retail sales would gain 0.2 percent in August. Compared to August last year, retail sales advanced 4.1 percent.
Excluding automobiles, gasoline, building materials and food services, retail sales climbed 0.3 percent last month after rising by a downwardly revised 0.9 percent in July. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously reported to have jumped 1.0 percent in July.
Despite August's moderate increase in core retail sales, the strong rise in July likely will keep intact economists' expectations for a healthy pace of consumer spending in the third quarter. Consumer spending, which accounts for more than two-thirds of the economy, increased at a 4.7 percent annualised rate in the second quarter, the most in four and a half years.
Economists expect consumer spending will pull back to just below a 4.0 percent rate in the third quarter, which would be more than enough to keep the economy growing at a moderate pace, rather than tipping into recession as signalled by financial markets.
The Federal Reserve is expected to cut interest rates again next Wednesday to blunt some of the hit on the economy from a year-long trade war between the United States and China.
Fed Chair Jerome Powell said last week he was not forecasting or expecting a recession, but reiterated the US central bank would continue to act "as appropriate" to keep the longest economic expansion in history on track. The Fed lowered borrowing costs in July for the first time since 2008.
The Atlanta Fed is forecasting the economy to grow at a 1.9 percent rate in the third quarter. The economy grew at a 2.0 percent pace in the April-June quarter. Consumer spending is being underpinned by the lowest unemployment rate in nearly half a century and a personal savings level of $1 trillion.
Last month, auto sales accelerated 1.8 percent after edging up 0.1 percent in July. Receipts at service stations fell 0.9 percent, reflecting cheaper gasoline. Sales at building material and gardening equipment stores jumped 1.4 percent, the most since January.
Online and mail-order retail sales increased 1.6 percent after shooting up 1.7 percent in July. Receipts at health and personal care stores rose 0.7 percent. Americans also spent more at hobby, musical instrument and book stores, boosting sales 0.9 percent.
But there were pockets of weakness in the retail sales report.
Receipts at clothing stores fell 0.9 percent last month and sales at electronics and appliance stores were unchanged. Furniture sales dropped 0.5 percent and Americans also cut back on spending at restaurants and bars, with sales declining 1.2 percent, the most since September 2018.
By Lucia Mutikani; editor: Paul Simao.