U.S. retail sales recorded their smallest gain in six months in August as consumers cut back on purchases of motor vehicles and clothing, but upward revisions to July data likely keep intact expectations of strong economic growth in the third quarter, Reuters reports.
The Commerce Department said on Friday retail sales edged up 0.1 percent last month, the smallest rise since February. Data for July was revised higher to show sales rising 0.7 percent instead of the previously reported 0.5 percent gain.
The modest increase in retail sales suggests that high gasoline prices could be pulling spending away from other categories. Economists polled by Reuters had forecast retail sales increasing 0.4 percent in August.
Retail sales in August advanced 6.6 percent from a year ago.
Excluding automobiles, gasoline, building materials and food services, retail sales nudged up 0.1 percent last month after an upwardly revised 0.8 percent jump in July. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
Core retail sales were previously reported to have increased 0.5 percent in July. Despite the surprise slowdown in core retail sales in August, consumer spending remains supported by a tightening labor market, which is steadily pushing up wages.
Annual wage growth increased at its fastest pace in more than nine years in August and there were a record 6.9 million job openings in July. Spending is also being underpinned by tax cuts and higher savings.
The economy is poised for strong growth in the third quarter and this year, but an escalating trade war between the United States and China is casting a shadow on the long-term outlook.
President Donald Trump last week threatened duties on another $267 billion worth of Chinese goods on top of a $200 billion tariff list that is awaiting his decision. Washington already has slapped duties on $50 billion worth of Chinese imports, provoking retaliation from Beijing.
The economy grew at a 4.2 percent annualized rate in the April-June period, the fastest in nearly four years and almost double the 2.2 percent pace set in the first quarter. Growth estimates for the third quarter top a 3.0 percent rate.
Auto sales fell 0.8 percent in August after slipping 0.1 percent in July. Receipts at service stations surged 1.7 percent, likely reflecting gasoline prices, which have risen by about 32 cents per gallon this year according to data from the U.S. Energy Information Administration.
Sales at clothing stores fell 1.7 percent, the biggest drop since February 2017. That followed a 2.2 percent increase in July.
Online and mail-order retail sales rose 0.7 percent after accelerating 1.5 percent in July. Americans spent a bit more at restaurants and bars, lifting sales 0.2 percent. Receipts at furniture stores fell 0.3 percent and sales at building material stores were unchanged last month. Spending at hobby, musical instrument and book stores rose 0.2 percent in August.