U.S. retail sales declined in August, a cautious signal about consumers’ ability to remain the primary driver of economic growth this year.
Sales at retail stores, online and at restaurants fell 0.3% in August to a seasonally adjusted $456.32 billion last month, the Commerce Department said Thursday. It was the first decline in retail sales since March. Sales increased 0.1% in July, a small upward revisionfrom an initial flat reading.
Excluding autos, retail sales last month fell 0.1%. Economists surveyed by The Wall Street Journal had expected overall sales would fall 0.1% in August, but rise 0.2% when excluding autos.
“Consumption is slowing in the current quarter which should diminish hopes of an above 3% rebound in overall growth,” said RSM chief economist Joseph Brusuelas.
A slowdown could challenge forecasts expecting gross domestic product to grow at a 3% pace in the second half of 2016 after expanding at a weak 1% pace through June. If consumer-spending growth slows, businesses and the government would need to step up outlays to realize the projected acceleration of the expansion.
Retail sales were up 1.9% in August from a year earlier, outpacing weak growth in consumer prices over the past year. But sales growth slowed from July’s annual increase of 2.4%.
Consumer spending has been the primary driver of growth so far this year, expanding at more than double the pace of the overall economy during the first half of 2016. Retail sales, a closely watched measure of consumer spending, showed strong gains this spring, before easing in recent months.
Solid, if slower, hiring this year and an unemployment rate below 5% is putting some upward pressure on wages. Higher earnings is one factor that had supported strong spending for most of this year.
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