Retail sales rebound on strong autos spending
REAL ECONOMY BLOG | September 15, 2022
Authored by RSM US LLP
Retail sales in the United States rose by 0.3%, in August, driven by a sharp rise in spending on automobiles, according to Commerce Department data released on Thursday.
But after adjusting for inflation, real retail sales growth was flat on the month, following the strong rebound of 0.8% in July.
The slowdown in the sales volume of goods suggests that consumer spending continued to shift toward services over the summer. With the exception of restaurants and drinking establishments, the dala includes only the sale of goods.
The control group—which strips out the more volatile food services, automobiles, building materials and gasoline categories—was flat in August in dollar terms, implying a decline of 0.6% in real terms after controlling for inflation.
At the same time, July’s nominal reading for the control group was revised lower to 0.4% from 0.8%.
On average, real sales of the control group were about 0.3% lower in the first two months of the third quarter, slightly exceeding the average of 0.23% in the previous quarter.
Because the control group accounts only for about one fourth of the total consumption spending, the slowdown in sales volume did not tell the whole story about spending strength, given the trend toward spending on services.
We expect retail sales growth to remain solid through the rest of the year with the prospect of a holiday season free of pandemic restrictions, a robust labor market, continued relief from supply-chain bottlenecks and trillions in excess savings.
In a separate report from the Bureau of Labor Statistics, initial jobless claims fell again last week to 213,000 from 218,000, reaching below the pre-pandemic level for the first time since May.
Still, many uncertainties remain around the volatility of energy prices, inflation and the Federal Reserve’s rate hike campaign.
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This article was written by Tuan Nguyen and originally appeared on 2022-09-15.
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