Retail sales strengthened in August as consumers paid more for gas, with the price of oil surging due to production output cuts and dwindling reserves.
Retail sales in August were up 0.6% over the previous month, beating Wall Street estimates of 0.1% growth. Sales, excluding autos and gas, were up 0.2%, beating Bloomberg estimates for a 0.1% decline.
At the same time, sales figures for July were revised down to a 0.5% increase, from a 0.7% increase.
Released by the Commerce Department, the August retail sales report provides a glimpse of consumer spending activity at a time when other economic data has been defying predictions of weakening, while the Federal Reserve has been trying to cool the economy by raising interest rates.
Nine of the thirteen categories in the report registered increases month over month. Gasoline sales at gas stations beat out all other categories, increasing 5.7% over July’s figure, as gasoline prices rose throughout the month of August.
Oxford Economics lead US economist Michael Pearce wrote in a note on Thursday morning, “The solid increase in headline retail sales in August was not as good as it appears because it was driven by a price-related surge in gasoline station sales while underlying goods and services spending lost momentum, and July’s gain was revised lower. Consumption growth is still on track for a strong gain in Q3 overall, but with job and wage growth slowing, student loan repayments restarting, and borrowing conditions still tightening, the headwinds to consumer spending are mounting.”
Non-store retail, a category which includes e-commerce sales, was unchanged from July’s overperformance due to Amazon Prime Day and other online sales producing a surge in sales for July.
Sporting goods and hobbies was down 1.6% from July, as miscellaneous retailers also saw sales decline 1.3%.
The August retail sales numbers will be the final print before spending begins being hit by the pending resumption of student loan repayments. Retailers at the Goldman Sachs Global Retailing Conference earlier in the week were uncertain of what the effects would be economically, however they will be closely watching the developments.
Tractor Supply (TSCO) CFO Kurt Burton said at the conference, “The student loan repayment is certainly one that we watch. We’re aware of it. And anything that takes money out of the wallet, certainly is harder for the consumer and takes some of that spend away from the goods and services that they spend on. So I think it’s one to be very conscious of.”