US Retail Sales Surge Unexpectedly, Sign of Resilient Demand
The value of all retail purchases climbed 0.7% last month after a revised downward 1.8% drop in July, Commerce Department figures showed Thursday. Excluding autos, sales advanced 1.8% in August, the largest increase in five months.
The median estimate from a Bloomberg survey of economists predicted a 0.7% drop in overall retail sales, with forecasts ranging from a 3.3% decline to a 1.1% gain.
US stock index futures cut losses and bonds slipped after the report.
The surprising improvement in sales, supported in part by back-to-school purchases and payments for millions of families with children, suggests healthy demand for goods. The report showed firmer receipts at online retailers, general merchandise stores, furniture stores and grocery stores.
The delta variant dampens demand for services such as travel and entertainment, which may allow Americans to shift spending toward goods. Retail sales data showed receipts at restaurants and bars, the only service spending category in the report, stagnated in August. Meanwhile, grocery store receipts soared 2.1%.
“Although spending on goods has been much higher than expected, this will likely only add to the shortages seen in recent months, while stagnating spending in restaurants and bars suggests that the broader recovery in consumption services has probably faltered, âMichael Pearce, senior US economist at Capital Economics, said in a note.
A surge in COVID-19 infections, rising prices and persistent supply chain challenges have led to a wave of downward revisions to third-quarter economic growth forecasts in recent weeks.
Earlier this month, economists at Goldman Sachs Group Inc. lowered their third-quarter consumption forecast to an annualized decline of 0.5% due to the impact of delta on spending on services.
Breakdown by category
According to the Commerce Department report, 10 of the 13 categories recorded increases in sales. Sales declined at auto dealerships, appliance and electronics stores, and sporting and hobby stores.
Sales at motor vehicle and parts dealers fell 3.6% in August after falling 4.6% a month earlier. This reflects soaring prices and limited inventories that have driven auto sales to their lowest level in over a year, according to Wards Automotive Group.
Americans have also faced higher prices for a variety of goods and services in recent months, with companies passing on – at least in part – additional costs associated with constraints on materials and labor. . The degree to which this played a role in the retail sales data is unclear as the numbers are not adjusted for price changes.
Sales of the Control Group, which are used to calculate gross domestic product and exclude food services, car dealerships, building supply stores and gas stations, jumped 2.5% in August, the highest in five months.
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