U.S. retail sales unexpectedly increased in August, likely boosted by back-to-school shopping and child tax credit payments from the government, which could temper expectations for a sharp slowdown in economic growth in the third quarter, Trend reports with reference to Reuters.
Retail sales rose 0.7% last month, the Commerce Department said on Thursday. Data for July was revised down to show retail sales declining 1.8% instead of 1.1% as previously reported.
Economists polled by Reuters had forecast retail sales dropping 0.8%.
Retail sales rebounded despite an ongoing global shortage of microchips, which is forcing automakers to cut production, leading to a scarcity of inventory at showrooms.
The semiconductor crunch, which has been worsened by the latest wave of infections driven by the Delta variant of the coronavirus, primarily in Southeast Asia, is also causing shortages of some electronic goods. Congestion at ports in China is also adding to the supply bottlenecks.
Retail sales are holding up even as spending is shifting back from goods to services like travel and entertainment, though soaring COVID-19 infections are likely delaying the services spending boom.
Retail sales are mostly goods, with services such as healthcare, education, travel and hotel accommodation making up the remaining portion of consumer spending. Restaurants and bars are the only services category in the retail sales report.
Excluding automobiles, gasoline, building materials and food services, retail sales rebounded 2.5% last month after a downwardly revised1.9% decline in July.
These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously estimated to have dropped 1.0% in July.
Most school districts started their 2021-2022 academic year in August, with in-person learning resuming after last year's shift to online classes because of the COVID-19 pandemic, marking the return of back-to-school shopping. Qualifying households in July began receiving money under the expanded Child Tax Credit program, which will run through December.