US retail sales climbed more than expected last month driven by purchases at auto dealers and online retailers, however an underlying gauge of consumer demand grew at its slowest pace in six months.
Headline retail sales rose 0.4 per cent in August, the Commerce Department said on Friday, exceeding economists’ expectations for a 0.2 per cent increase, according to a Reuters poll.
That followed a revised 0.8 per cent rise the previous month, (previously 0.7 per cent), when sales were given a boost by Amazon’s Prime Day promotions.
August’s jump was driven by strong sales of motor vehicles and online retailers that was partially offset by weakness at restaurants, clothing stores and petrol stations.
However, so-called control retail sales, which strip out volatile items such as food, petrol and building materials and offers a picture of underlying sales, rose 0.3 per cent last month in line with forecasts. That marked the slowest pace of growth since February.
Consumer spending posted its strongest increase in 4½ years in the second quarter but concerns are rising about how much longer the US consumer will be able to support domestic growth amid uncertainty about Washington and Beijing’s ongoing trade war.
The Federal Reserve is expected to lower interest rates by 25 basis points when it meets next week, though firming inflation could muddy the outlook for the central bank. Its rate cut in July following in part on the recognition that inflation did not seem to be an immediate threat.
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