EmailRetail sales increased 0.9% in August after increasing a downwardly revised 0.6% (from 0.8%) in July. The Briefing.com consensus expected retail sales to increase 0.7%. While the headline appears to showcase a solid consumption trend, the details show a much different story. First, higher gasoline prices drove gasoline station sales up 5.5% and accounted for 0.6 percentage points of the overall retail sales gain. Once prices are factored out, the positive effects on GDP from the strong retail sales number will be wiped away. Second, core retail sales, which exclude the highly volatile motor vehicles, gasoline stations, and building material and supply dealers, fell 0.1% in August.
This measure paints a more accurate picture of overall consumer demand. The drop signals that consumers are concerned about future income growth, which means consumption growth over the next few months does not look strong. Motor vehicle sales rose 1.3% after increasing 0.1% in July. Excluding motor vehicles, retail sales increased 0.8% for a second consecutive month in August. The consensus expected these sales to increase 0.8%.
