Retail sales in U.S. rise as consumers unshaken by turmoil

The 0.2 per cent increase in August followed a 0.7 per cent gain in July that was larger than previously reported.
The 0.2 per cent increase in August followed a 0.7 per cent gain in July that was larger than previously reported.PHOTO: BLOOMBERG

WASHINGTON (BLOOMBERG) - Retail sales in the U.S. climbed for a second straight month, a sign consumers may be looking past recent volatility in financial markets.

The 0.2 per cent increase in August followed a 0.7 per cent gain in July that was larger than previously reported, Commerce Department figures showed Tuesday in Washington. The median forecast of 84 economists surveyed by Bloomberg called for a 0.3 per cent advance.

Although confidence has taken a hit from stock-market turmoil and global-growth concerns, the data show households are still putting their savings from cheap energy to work. More jobs and higher pay would go a long way in supporting household spending, which Federal Reserve policy makers are watching as they consider raising interest rates as soon as this week.

"The trend is strong and robust," said Gregory Daco, head of U.S. macroeconomics at Oxford Economics USA in New York, who correctly forecast the increase in retail sales. Tuesday's data shows spending is "resistant to outside shocks, and that's quite important at this point in time."

Estimates in the Bloomberg survey ranged from a decrease of 0.1 per cent to a 0.6 per cent gain. July retail sales were previously reported as up 0.6 per cent. June data was unrevised at little changed.

Another report showed that while consumers are holding up, factories are struggling. Manufacturing in the New York region contracted in September for a second straight month, reflecting declining orders and employment, according to figures from the Federal Reserve Bank of New York.

Broad-Based Gains Ten of 13 major retail categories showed increases last month, including auto dealers, restaurants and clothing stores, the Commerce Department's report showed.

A 1.8 per cent drop in receipts at gas stations weighed on the retail sales figures in August as the cost of a gallon of regular gasoline fell 7.5 per cent last month. The government's data aren't adjusted for changes in prices.

Sales climbed 0.7 per cent at automobile and parts dealers last month after rising 1.3 percent in July. The data mesh with industry data from Ward's Automotive Group that showed sales of cars and light trucks soared to a 17.7 million annualized rate in August, the most since July 2005. Ford Motor Co., Fiat Chrysler Automobiles NV and General Motors Co. all reported robust sales powered by pickups and sport utility vehicles.

Retail sales excluding autos increased 0.1 per cent in August after advancing 0.6 per cent the month before, the Commerce Department report showed. They were projected to rise 0.2 per cent, according to the Bloomberg survey median.

The figures used to calculate gross domestic product, which exclude categories such as food services, auto dealers, home- improvement stores and service stations, increased 0.4 percent last month after rising 0.6 per cent.