U.S. retail sales inched ahead by 0.2% in August, boosted by a surprising gain in auto sales that offset the drag from lower gasoline prices, the Commerce Department reported Thursday (Sept. 14).
Economists had expected retail sales to fall 0.2% after rising 1.4% in July.
Auto sales increased 0.4% in August, despite reports from automakers earlier that showed declining sales. Sales excluding autos rose 0.2% in August, a bit less than the 0.3% expected by economists surveyed by CBS MarketWatch.
The increase in auto sales was “inexplicable,” said Ian Shepherdson, chief U.S. economist for High Frequency Economics. It “cannot be squared with the 6.3% drop in unit sales reported by the automakers.”
Sales at gasoline stations dropped 1% in August as gasoline prices tumbled. The figures are seasonally adjusted but are not adjusted for price changes.
The decline in gas prices should be positive for real (that is, inflation-adjusted) consumer spending going forward; lower pump prices would leave more disposable income to purchase other goods and services.
“If sustained, lower gas prices will free up enough disposable income to lift non-gasoline retail sales by an additional percentage point over 2005 levels, and give the economy a needed jolt,” said Peter Morici, a business professor at the University of Maryland.
The report paints a muddled picture for consumer spending two-thirds of the way through the third quarter. Spending was boosted in July by high gas prices on the one hand and by bargains at the auto lots on the other. Those factors reversed in August.
Sales excluding both autos and gasoline increased 0.5% in July and 0.4% in August, a steady but unspectacular increase.
Retail sales were revised slightly lower in June and were unrevised in July at 1.4%. Sales excluding autos were revised lower by four-tenths of a percentage point to 0.6% in July.
Retail sales account for about half of consumer spending and about one-third of total final demand in the economy. Retail sales are up 6.7% in the past year in nominal terms.