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US retail sales down 0.2% in August; biggest drop in six months

It was likely hurt by the impact of Hurricane Harvey on motor vehicle purchases, suggesting a moderation in cosumer spending in the third quarter

Reuters  |  Washington 

Shoppers walk through Macy's department store in New York. (Photo: Reuters)
Shoppers walk through Macy's department store in New York. (Photo: Reuters)

unexpectedly fell in August, likely hurt by the impact of on motor vehicle purchases, suggesting a moderation in in the third quarter.

The Commerce Department said on Friday retail dropped 0.2 percent last month, the biggest decline in six months. Data for July was revised to show increasing 0.3 percent instead of the previously reported 0.6 percent jump.

Economists polled by Reuters had forecast retail nudging up 0.1 percent.

tumbled 1.6 percent last month, the biggest drop since January, after being unchanged in July. Harvey, which slammed Texas in the last week of August and unleashed unprecedented flooding in Houston, probably dented of automobiles.

are, however, expected to get a boost from the replacement of flood-damaged Overall retail increased 3.2 percent in August on a year-on-year basis, pointing to underlying strength in domestic

The Commerce Department said while it could not isolate the impact of Harvey on retail sales, it had received indications from companies that the hurricane had "both positive and negative effects on their data while others indicated they were not impacted at all." Excluding automobiles, gasoline, building materials and foodservices, retail fell 0.2 percent last month after anunrevised 0.6 percent increase in July. These so-called core retail correspond most closely with the component of gross domestic product. Last month's drop suggested could slow in the July-September period.

extended losses after the data while prices of longer-dated US Treasuries added to gains. The dollar was trading weaker against a basket of currencies.

still strong

The weak retail report will probably do little to change expectations that the Federal Reserve will announce a plan to start shrinking its $4.2 trillion portfolios of Treasury bonds and mortgage-backed securities at its Sept. 19-20 policy meeting.

The US central bank is expected to raise interest rates again only in December. It has increased borrowing costs twice this year. Consumer spending, which accounts for more than two-thirds of US economic activity, increased at a 3.3 percent annualized rate in the second quarter. That boosted growth to a 3.0 percent rate in the April-June period. Despite sluggish wage growth, even as the labour market nears full employment, the fundamentals for are solid. The stock market is near record highs and house prices have maintained their advance, increasing household wealth.

Last month, at building material stores fell 0.5 percent after surging 0.9 percent in July. Clean-up efforts in the aftermath of Harvey as well as Hurricane Irma, which struck last weekend, could buoy of building materials in September.

Receipts at service stations increased 2.5 percent in August, reflecting higher gasoline prices. at electronics and appliance stores fell 0.7 percent and receipts at clothing stores dropped 1.0 percent after rising 0.5 percent in July. Department store retailers are struggling with falling traffic in shopping malls and increased competition from and other at declined 1.1 percent in August, the biggest drop since April 2014. Receipts at restaurants and bars rose 0.3 percent and at sporting goods and hobby stores edged up 0.1 percent.

First Published: Fri, September 15 2017. 19:40 IST