Retail sales fall 0.3% in August, a sharper drop than expected
Retail sales fell in August, during what is traditionally back-to-school shopping season, as shoppers continued to rein in their spending. It was the first drop since March.
U.S. retail sales fell 0.3% last month compared with July, the Commerce Department reported Thursday — a sharper drop than the 0.1% decline that was expected. July sales, however, were revised up slightly to 0.1% growth from an estimate of no growth.
A drop in auto sales was expected to drag down overall August retail sales. Even without the volatile motor vehicle and parts sector stripped out, retail sales were down 0.1%.
The lackluster showing raised questions about whether consumers can continue to drive economic growth in the remaining months of 2016. Consumer spending, which makes up two-thirds of U.S. economic activity, is a closely watched barometer of economic health.
Economists have said that slow spending in recent years can be partly blamed on stagnant wage growth. But this week, the Census Bureau reported that the median household income jumped 5.2% last year to $56,500. It was the sharpest annual increase on record.
The Federal Reserve will be looking at consumer spending along with other elements of the economy as it decides whether to raise interest rates at its meeting next week. Fed officials have two meetings scheduled before the presidential election in November.
In August, 8 out of 13 retail categories fell.
Building and garden stores saw a 1.4% decline, as did sporting goods and hobby shops. Furniture stores fell 0.7%. Gas stations dropped 0.8%.
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UPDATES:
7 a.m.: This article was updated to add that retail sales were expected to fall only 0.1% in August.
This article was originally published at 6:40 a.m.
