The Census Bureau said that retail sales rose 0.2 percent in August, slowing from the 0.7 percent growth rate seen in July. It was the fourth increase in the past six months (with the other two being unchanged), as consumer spending has rebounded somewhat from softness earlier in the year. The year-over-year pace has improved from a disappointing 1.3 percent pace in April to 2.2 percent in August; although, that was down from 2.6 percent in the prior report. Nonetheless, the public remains cautious in their willingness to open their pocketbooks. As an illustration of that point, retail sales growth was 4.9 percent year-over-year twelve months ago, or almost double the current pace.
With that said, these data have been skewed by changed in gasoline prices over the past year. As such, one must disentangle these findings by sector to get a fuller picture of what is really happening regarding retail spending. Lower gasoline prices have resulted in a drop in sales, which are expressed in nominal terms, of 17.2 percent since August 2014. Retail sales excluding gasoline were up 4.4 percent year-over-year in this latest report – a much more encouraging number. This would indicate stronger consumer spending activity than the headlines might seem to indicate.
Looking more closely at the August retail sales data, most of the figures were higher for the month. The largest gains were in the following retailers: miscellaneous store retailers (up 0.9 percent), health and personal care stores (up 0.8 percent), food and beverage stores (up 0.7 percent), motor vehicles and parts dealers (up 0.7 percent) and food services and drinking places (up 0.7 percent). In contrast, spending was lower for the month for building materials and garden supplies (down 1.8 percent), gasoline stations (down 1.8 percent) and furniture and home furnishings (down 0.9 percent).
Chad Moutray is the chief economist, National Association of Manufacturers.