US Retail Sales Top Expectations in August

Dana Telsey, CEO and Chief Research Officer at Telsey Advisory Group, reacts to retail sales data, talks about consumer health, and gives her expectations for the luxury sector.

US retail sales rose in August for a third month in a broad advance, rounding out a summer of resilient spending.

The value of retail purchases, not adjusted for inflation, increased 0.6% after a similar gain in July, Commerce Department data showed Tuesday. That beat all estimates in a Bloomberg survey of economists. Excluding cars, sales climbed 0.7%.

Nine out of 13 categories posted increases, led by online retailers, clothing stores and sporting goods, likely reflecting back-to-school shopping. Motor vehicle sales rose at a slower pace, even though some economists expected it to be a drag on the overall figure.

Tuesday’s report adds to evidence that consumers are still spending even as tariffs boost the cost of some goods, sentiment remains subdued and the labor market shows signs of faltering. Though wage growth has cooled, many workers’ pay gains continue to outpace inflation, and others, particularly the wealthy, are benefiting from a stock market rally.

Read More: Top 10% of Earners Drive a Growing Share of US Consumer Spending

“Consumers say they are gloomy about the economic outlook, but they are still opening their wallets and spending, even on little splurges for themselves and their families,” Heather Long, chief economist at Navy Federal Credit Union, said in a note. “The big question is how long this can continue if layoffs pick up.”

Federal Reserve officials are closely tracking consumer spending — which supports two-thirds of US economic activity — as they decide the trajectory of interest rates. While they’re still assessing the impact President Donald Trump’s tariffs will ultimately have on prices, they’re widely expected to cut rates at the end of their two-day meeting Wednesday in an effort to shield the labor market from further deterioration.

The S&P 500 Index fluctuated and Treasury yields moved lower.

The retail sales report showed so-called control-group sales — which feed into the government’s calculation of goods spending for gross domestic product — climbed 0.7% in August, so far indicating a healthy third quarter. The measure excludes food services, auto dealers, building materials stores and gasoline stations.

The retail sales figures largely reflect purchases of goods, which comprise roughly a third of overall consumer outlays. Because the data are not adjusted for inflation, an advance could also reflect the impact of higher prices.

“They look really strong at face value, but some of that is just due to higher prices of product, not necessarily more volume,” said Shannon Grein, an economist at Wells Fargo & Co. While “we’ve all been spooked by a slower jobs market, the consumer data is telling us that households are still spending.”

Consumer prices for several categories in the report, including apparel and cars, increased last month. A report on real spending on goods and services for August will be released later this month.

Spending at restaurants and bars, the only service-sector category in the retail report, advanced 0.7% after declining in the prior month.

Inflation data out last week suggested companies largely refrained from price hikes last month, as many firms have been wary that steep markups could push customers away.

--------

Watch Bloomberg Radio LIVE on YouTube

Weekdays 7am-6pm ET

Follow us on X

Subscribe to our Podcasts:

Bloomberg Daybreak

Bloomberg Surveillance

Bloomberg Intelligence

Balance of Power

Bloomberg Businessweek

Listen on Apple CarPlay and Android Auto with the Bloomberg Business app:

Apple CarPlay

Android Auto

Visit our YouTube channels:

Bloomberg Podcasts

Bloomberg Television

Bloomberg Originals