Announced this morning, Retail Sales increased by 1.2% in August, higher than expected, and a sizable rebound from the negative reading in the previous month. The Control Group, which is a closer measure of the inputs for GDP that excludes sales of food, autos, building materials, and gas stations, increased 1.4% in August, much higher than expected and also a rebound from the previous month’s negative figure.
Reviewing the various categories, monthly sales for Gasoline Stations, up 3.1%, and Non-store Retailers, up 2.6%, were relatively strong, while monthly sales at Department Stores, down -0.8%, and Building Material & Garden Dealers, down -0.2%, were relatively weak.
Overall, retail sales increased higher than expected for both the headline figure and the control group. Sales at gasoline stations increased less than the previous month but were still strong. Strength was also seen in non-store retailers, including online shopping, during the back-to-school season. Sales in those areas were offset by some slight weakness in home improvement stores and garden dealers.
Consumer spending rebounded strongly in August, despite continued elevated inflation measures and high energy prices due partly to the Iran conflict. If individuals feel secure in their employment, they tend to spend money in the economy. Meanwhile, the Federal Reserve is announcing their interest rate decision later today, with inflation squarely in focus. Whether consumers can continue to spend amidst this backdrop will be key for the economy and markets in the coming weeks.
In all, the 10-year US Treasury yield is little changed this morning, and equity futures are higher as we head into the market open.
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