Retail Sales Stronger Than Expected In August, Up 0.6%

Consumers surprised forecasters again in August and boosted retail sales by 0.6% over the previous month, easily beating expectations.

On a year-over-year basis, sales were up 2.5% compared to August, 2022.

Forecasts for August had ranged from as low as up 0.1% to a gain of 0.4%.

The August results follow a stronger-than-expected July. Retail sales in July were initially reported as being up 0.7% over the previous month, and then revised to 5%.

The downward revision for July casts a bit of a shadow on August’s positive results, but the numbers indicate that Americans still are shopping and spending.

However, inflation still accounts for some of the sales increase.

This week’s CPI report showed a bigger-than-expected price jump in August, with prices up 0.6% over July, and up 3.7% year-over-year.

Higher gasoline prices also contributed to the 0.6% gain. Excluding automotive and gasoline sales rose 0.2%.

Previous upside surprises in the monthly retail sales numbers have been seen as evidence of the continued resilience of the American consumer in the face of high inflation. But economists have been warning since the beginning of the year that a slowdown in spending is inevitable.

Jack Kleinhenz, chief economist for the National Retail Federation, said last week that economic data shows spending momentum is slowing. He noted however, that “the economy is slowing but not halting,”

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CEO Doug McMillion, speaking at a Goldman Sachs investor conference this week, said he is feeling “pretty good” about the state of the consumer based on what is happening in his stores.

McMillion said that while shoppers are being discerning and careful about how they spend, back-to-school sales were strong, a positive sign for the upcoming holiday season.

Retailers, on a whole, have been generally cautious in their guidance for the fourth-quarter, with most of the big retailers saying they are seeing signs that Americans are slowing their spending.

Deloitte yesterday released its annual holiday retail forecast, predicting weaker growth than last year. Deloitte expects holiday retail sales to increase between 3.5% and 4.6% between November and January. Last year sales, excluding automotive and gasoline, and seasonally adjusted) were up 7.6%.