Announced this morning, Retail Sales increased by 0.6% in August, higher than expected and the same as last month’s revised increase. 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 0.7% in August, well above expectations and well above the previous month’s increase.
Reviewing the various categories, monthly sales for Non-store retailers, up 2.0%, Clothing & Accessories, up 1.0%, and Food Service and Drinking Places, up 0.7%, were all relatively strong while monthly sales at Miscellaneous Store Retailers, down -1.1%, and Furniture & Home Furnishings, down -0.3%, were relatively weak.
Overall, retail sales increased more than expected in August for both the headline and the control group. With strength in areas such as clothing and non-store retailers, it appears there was decent back to school spending, despite tariffs rolling through the supply chain. To compensate, consumers pulled back on furniture and other items. The control group coming in well above expectations may give the Federal Reserve additional thoughts as they contemplate an expected rate cut in their meeting this week. The outlook for additional changes in Fed policy and the continued impact of tariffs on consumers will be key factors for the economy in the weeks ahead.
In all, the 10-year US treasury yield ticks higher following the report and equity futures are mixed as we head into the market open.
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