US Retail Sales Slump 0.3 Percent, Ending 4 Months of Gain
WASHINGTON- U.S. shoppers retreated in August, cutting back their spending at auto dealers, furnishers and building material stores to depress overall retail sales after four straight monthly gains.
The Commerce Department said Thursday that retail sales fell 0.3 percent in August, a tentative sign of caution for American consumers.
Rising incomes and job growth have trickled into consumer spending, supporting economic growth even as a strong dollar and low energy prices have hurt the U.S. industrial sector. Over the first eight months of the year, retail sales rose 2.9 percent compared with the same period in 2015.
“The underlying fundamentals for the consumer remain quite strong,” said Stephen Stanley, chief economist at Amherst Pierpont. “That makes August’s clunker of a report a little hard to explain.”
Stanley noted that the decline in retail sales might reflect some pre-presidential election doldrums and that sales reports in the next few months will be critical to monitor.
Still, consumers clearly appeared to pause in August. Spending on building material and furniture dipped, even though home sales have been solid in recent months. Auto dealers reported declining sales ahead of the new model year. Sales also fell at gas stations, largely reflecting lower oil prices. Even online and catalog sales, a sector that usually posts strong gains, slipped last month.
Not all categories declined. Back-to-school shopping appeared to bolster sales of clothing. And spending at restaurants and grocery stores also improved.
The solid retail spending in prior months had defied anemic economic growth in the first half of 2016. Retail sales seemed to largely track a robust pace of hiring, which similarly went against the slowing pace of overall economic growth.
The unemployment rate remains a healthy 4.9 percent. And monthly job gains have been averaging averaged 232,000 since June, an indication that many employers expect growth to pick up in coming months.
As the job market has healed from the Great Recession, more Americans are finally enjoying solid income gains. The median household income jumped 5.2 percent last year to an inflation-adjusted level of $56,516, the Census Bureau said Tuesday. It was the largest annual increase since 1967, when the government started reporting the data.
Still, the durable but sluggish recovery from the recession means that incomes are still depressed. The median household still earns 1.6 percent less than it did in 2007 before the recession struck.