In this morning’s data, Retail Sales increased 0.1% in August, higher than expected and well below the previous month’s revised increase. Monthly sales for Miscellaneous Store Retailers, up 1.7%, and Non-store Retailers, up 1.4%, were strong while monthly sales at Gasoline Stations, down -1.2%, and Motor Vehicle & Parts Dealers, down -0.1%, were relatively weak. The Control Group, which is a closer measure of the inputs for GDP that excludes sales for food, autos, building materials, and gas stations, increased 0.3% in August, as expected and one tenth below the revised level from the previous month.
Overall, headline retail sales were higher than expected in August, growing slightly following a strong increase the previous month. During the month, spending occurred online per the increase in non-store retailers. The weaker sales in motor vehicle and parts dealers highlight the swings in the automotive industry in recent months and the decreases in gasoline sales had less of an impact on the control group, which is notable for GDP. Generally, consumers appear to be more selective as we have heard in some recent earnings reports.
Spending is still occurring in the economy. Considering this report and the totality of the data, the Federal Reserve is likely to begin interest rate reductions at this week’s meeting. How this policy affects consumers, and the labor market will be closely watched in the coming weeks.
In all, the 10-year US treasury yield moves higher following the report and equity futures are also higher as we head into the market open.
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