Retail sales rose for the fourth straight month in August, but the pace of growth continues to slow as the initial post-shutdown burst is running out of strength.
Total retail sales rose by 0.6%, below the 1.0% gain expected and following a 0.9% gain in July. Sales fell due to COVID in the spring before solid gains in May (18.3%) and June (8.6%).
Motor vehicle sales rose by 0.6% in August after a 1.0% decline in July. Industry data had suggested a larger increase in the month.
Retail sales excluding motor vehicles rose by 0.7% in August, below the 1.0% gain expected, as gains in several key components were offset by large declines in others.
Clothing stores sales rose by 2.9% in August, as back-to-school sales continued in the month, while electronics and appliance store sales rose by 0.8% after a 20.7% in July when both adults and children were setting up their home offices.
In line with strong home sales, furniture store sales rose by 2.1% and building materials sales rebounded by 2.0% after a 2.4% decline in the previous month.
As state restrictions continue to loosen, spending at restaurants and bars rose by 4.7% in August and gasoline station sales increased by 0.4% after a 4.4% increase in July.
However, spending at sporting goods stores fell by 5.7% after a 5.3% decline in the previous month, as many fall sports programs have been cancelled.
Food store sales fell by 1.2% in August after a 0.6% increase in July, but remained 10% above their year-ago level due to the spikes heading into the COVID shutdowns.
The closely watched control group – total sales excluding motor vehicles, gasoline, building materials, and food services – fell by 0.2% after a 1.0% increase in July and a 6.1% gain in June.
Even with a downward adjustment to sales in July, the trend remains sharply positive for the third quarter.
Released later in the morning, business inventories rose by 0.1% in July, with retail inventories unrevised from the 1.2% increase in the advance estimate. Wholesale inventories were already reported down 0.3%, while factory inventories fell 0.5%.
Business sales surged by 3.2%, with extremely strong sales gains at the factory and wholesale levels and a modest increase in retail trade sales.
Released at the same time as business inventories, the NAHB’s housing market index jumped to a record high reading of 83 in September from 78 in August, reflecting the record low level of mortgage rates.
The housing sector remains the one consistently strong sector of the economy due to the very accommodative level of rates.
The NAHB did caution that builders are concerned about rising materials prices, especially for lumber, and that more production or increases in tariff relief may be needed to avoid a slowdown soon.
Housing starts and building permits data for August will be released Thursday morning and are expected to show the pace of building remained brisk after a surge in July.