August retail sales declined more than expected, the Commerce Department said Thursday, reflecting a slowdown in auto sales and continued low fuel prices.
Retail sales fell 0.3% since July, the first decline in five months. Economists polled by Bloomberg expected a median 0.1% decrease, although their expectations ranged from a decline of 0.8% decrease to a 0.2% increase. Core sales, which exclude auto sales, fuel station sales and building materials sales, fell 0.1%. last month. (Core sales are used to calculate GDP.) In addition, July’s sales were revised to a 0.1% gain from a previously report of flat sales.
“This is not a good report, for the most part,” Chris Christopher, director of consumer economics at IHS Global Insight, told Bloomberg. “The consumer’s doing relatively well — even with these numbers, it’s one of the strongest parts of the economy. There’s modest inflation, real disposable income gains are relatively robust, and they feel pretty confident.”
The unexpected drop in U.S. retail sales in August across so many categories is a bummer after an encouraging report from the Census Bureau earlier this week indicating the largest gains in employment and household income since 2007 — growth that should bode well for consumer spending, the U.S. economy’s main driver.
Real median household income — essentially the middle of middle-income earners — grew by an inflation-adjusted 5.2% from $53,718 in 2014 to $56,516 in 2015, the first annual increase since 2007. The number of full-time, year-round workers increased by 2.4 million in 2015.
But August's sales portend potential trouble ahead for retailers in the second half of the year — and the Commerce Department report shows that e-commerce retailers are not immune.
E-commerce (and catalog) sales suffered a rare drop in August, falling 0.3%, while home improvement sales fell 1.4%, health and beauty sales fell 0.1%, sporting goods/hobby/books/music sales fell 1.4%, and department store sales fell 0.6%. But apparel sales got a lift last month, increasing 0.7% — the largest increase in that category since last year. Electronics store sales rose 0.1%.