Retail sales jump in August: Resilient consumer or one-off factors?
|Summary
Despite wilting consumer confidence amid renewed COVID worries, retail sales shot up0.7% in August. Control group sales posted a 2.5% gain, the biggest since stimulus checks went out in March. We see some gains reflecting catch-up in stores where inventory was previously picked clean and others tied perhaps to the Child Tax Credits and back-to-school spending. This report may nudge our Q3 PCE growth forecast slightly higher, but we do not see this as the start of another surge in goods spending.
Maybe there is a cure for the summertime blues?
Retail sales picked up sharply in August rising 0.7% despite aconsensus expectation for an equally large decline. The gain herecame despite a sharp 3.6% drop at motor vehicle and parts dealersamid ongoing shortages and supply chain issues. That resulted in aneye-popping gain of 1.8% for retail sales ex-autos.
Prior to the release of the data, it was tough to make a compelling case for the sudden pick-up in core spending revealed today. Rising COVID cases amid the delta variant and deteriorating consumer confidence hardly provide the mood music for the biggest monthly increase in control group sales since the stimulus check hit bank accounts back in March.
Recent months have been characterized by services spending outpacing, or even off setting declines in goods spending. That theme took a holiday in August as restaurant sales stalled and grocery stores apparently benefited adding 2.1% in the month signaling a reluctance to venture out that we were anticipating in August based on high frequency mobility data.
To some extent what might be happening here is some catch-upsales for categories where inventory was picked clean earlier in this cycle. Furniture stores sales shot up 3.7% while building materialsand garden stores saw sales increased 0.9%.
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