Retail sales stronger than expected in August as consumers keep spending
Consumers continue to show their resilience in August as retail sales continued to grow, although at a slower rate than earlier in the summer.
Core retail sales in August rose 0.3% month-over-month and were up 3.3% year-over-year, according to data released Tuesday by the U.S. Census Bureau. (As defined by the National Retail Federation, core retail sales exclude auto dealers, gasoline stations and restaurants.) Core retail sales were up 3.4% year-over-year for the first eight months of the year, in line with NRF’s forecast for 2024 retail sales to grow between 2.5% and 3.5% over 2023.
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Overall retail sales in August were up 0.1% month-over-month, surprising economists who had expected a 0.2% decline, and up 2.1% unadjusted year-over-year. That compared with increases of 1.1% month-over-month and 2.9% year-over-year in July.
“While sales growth decelerated from last month’s pace, there is little hint of consumer spending unraveling,” said NRF chief economist Jack Kleinhenz. “Households have the underpinnings to spend as recent wage gains have outpaced inflation even though payroll growth saw a slowdown in July and August.”
Commenting on the August sales report, Nikki Baird, VP of strategy & product at retail technology company Aptos, said that the American consumer “has been more resilient than anyone could have expected.”
“But that isn’t a free pass for retailers to underinvest in their stores,” she added. “Investments in labor, investments in customer experience tech, investments in digital transformation of the store …it’s been too easy to kick the can down the road until you suddenly realize there’s no road left.”
The Census Bureau released the numbers the day before the Federal Reserve is expected to announce an interest rate cut.
“Easing inflation is providing added spending capacity to cost-weary shoppers and the interest rate cuts expected to come from the Fed should help create a more positive environment for consumers in the future,” added Kleinhenz.
According to the Census Bureau data, sales at “miscellaneous” store retailers rose 1.7% in August. Online store sales rose 1.4%, while sales at sporting goods, hobby, musical instrument and book stores increased 0.3%. Sales at building material and garden equipment store sales inched up 0.1%. Sales at gasoline stations fell 1.2% amid lower prices at the pump.
Last week, the CNBC/NRF Retail Monitor, powered by Affinity Solutions, reported that core retail sales were up 0.17% month-over-month in August and up 1.93% year-over-year. That compared with increases of 0.95% month-over-month and 1.69% year-over-year in July.
Unlike survey-based numbers collected by the Census Bureau, the Retail Monitor uses actual, anonymized credit and debit card purchase data compiled by Affinity Solutions and does not need to be revised monthly or annually.
