WASHINGTON (Reuters) – U.S. retail sales increased more than expected in August as higher gasoline prices boosted receipts at service stations.
Retail sales rose 0.6% last month, the Commerce Department said on Thursday. Data for July was revised lower to show sales advancing 0.5% instead of the previously reported 0.7%.
Economists polled by Reuters had forecast retail sales gaining 0.2%. Retail sales are mostly goods and are not adjusted for inflation. A surge in gasoline prices last month likely squeezed budgets for low-income families. Excluding gasoline stations, retail sales rose 0.2%.
Gasoline prices accelerated in August, peaking at $3.984 per gallon in the third week of the month, the highest this year, according to data from the U.S. Energy Information Administration. That compared to $3.676 per gallon during the same period in July.
Amazon’s Prime Day promotion in July, which was the biggest on record, and parents starting their back-to-school shopping early, likely pulled forward some spending.
Online retail sales were flat last month.
Though spending remains supported by higher wages from a tight labor market, the outlook is darkening. Excess savings accumulated during the COVID-19 pandemic continue to be run down. Credit card balances have risen sharply, with delinquencies at an 11-year high in the second quarter, according to recent data from the New York Federal Reserve.
Millions of Americans resume payments on student loans in October. Goldman Sachs estimates that the resumption of payments in full would be equal to roughly $70 billion, or around 0.3% of disposable personal income.
Excluding automobiles, gasoline, building materials and food services, retail sales edged up 0.1% in August. Data for July was revised down to show these so-called core retail sales up 0.7% instead of the previously reported 1.0%.
Core retail sales correspond most closely with the consumer spending component of GDP. Despite August’s tepid core sales, strong spending on services is expected, which should lift consumption. There is evidence that Americans are splurging on services like concerts, movies and sporting events, likely driving consumer spending and the overall economy this quarter.
Gross domestic product growth estimates for the third quarter are currently as high as a 5.6% annualized rate. The economy grew at a 2.1% pace in the April-June quarter.
The economy’s resilience is underscored by the labor market, which remains tight.
A separate report from the Labor Department on Thursday showed initial claims for state unemployment benefits rose to a seasonally adjusted 220,000 for the week ended Sept. 9 from 217,000 the prior week.
Economists had forecast 225,000 claims for the latest week. The period included the Labor Day holiday, which could have injected some volatility into the data. Claims are on the lower end of their 194,000-265,000 range for this year.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
