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US retail sales rise more than expected in August
[WASHINGTON] 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 per cent 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 per cent instead of 0.7 per cent as previously reported.
Economists polled by Reuters had forecast retail sales would gain 0.2 per cent in August. Compared to August last year, retail sales advanced 4.1 per cent.
Excluding automobiles, gasoline, building materials and food services, retail sales climbed 0.3 per cent last month after rising by a downwardly revised 0.9 per cent 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 per cent 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 per cent annualized rate in the second quarter, the most in 4-1/2 years.
Economists expect consumer spending will pull back to just below a 4 per cent 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 signaled by financial markets.
The US 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 per cent rate in the third quarter. The economy grew at a 2 per cent 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 US$1 trillion.
Last month, auto sales accelerated 1.8 per cent after edging up 0.1 per cent in July. Receipts at service stations fell 0.9 per cent, reflecting cheaper gasoline. Sales at building material and gardening equipment stores jumped 1.4 per cent, the most since January.
Online and mail-order retail sales increased 1.6 per cent after shooting up 1.7 per cent in July. Receipts at health and personal care stores rose 0.7 per cent. Americans also spent more at hobby, musical instrument and book stores, boosting sales 0.9 per cent.
But there were pockets of weakness in the retail sales report.
Receipts at clothing stores fell 0.9 per cent last month and sales at electronics and appliance stores were unchanged. Furniture sales dropped 0.5 per cent and Americans also cut back on spending at restaurants and bars, with sales declining 1.2 per cent, the most since September 2018.