Key facts
- U.S. retail sales increased by 1.2% in August.
- Economists had forecast a 0.8% rebound in retail sales.
- July retail sales saw a revised 0.5% drop.
- Sales of motor vehicles and gasoline contributed to the August increase.
- Core retail sales rose 1.4% in August.
- Third-quarter economic growth estimates exceed a 2.0% annualized rate.
U.S. retail sales rebounded more than expected in August, with a 1.2% increase following a revised 0.5% drop in July, according to data from the Commerce Department's Census Bureau. This surge, driven by increased household purchases of motor vehicles and higher receipts at service stations due to rising gasoline prices, suggests continued economic resilience despite high inflation.
Economists surveyed by Reuters had predicted a more modest 0.8% rise in retail sales for August. The increase in sales, which are primarily goods and not adjusted for inflation, was also influenced by back-to-school shopping. Consumers are reportedly becoming more selective and seeking lower-priced goods, with sentiment deteriorating this month.
Spending is being supported by steady wage growth and recent stock market gains, though households are saving less and tapping into nest eggs. The strong retail sales figures, coupled with persistent price pressures and a labor market regaining strength, are bolstering expectations that the Federal Reserve will implement an interest rate hike later on Wednesday.
Excluding volatile categories like automobiles, gasoline, building materials, and food services, core retail sales saw a significant jump of 1.4% in August, surpassing the 0.4% rise economists had forecast. These core sales are closely aligned with the consumer spending component of gross domestic product. Current estimates for third-quarter economic growth exceed a 2.0% annualized rate, compared to the 1.5% pace recorded in the previous quarter.