Retail sales in the U.S. missed economists' forecast in August even as demand for automobiles remained strong, the latest sign that a major part of the economy has slowed in the third quarter.
The Commerce Department announced on Friday that retail sales rose 0.2 percent after an upwardly revised 0.4 percent rise in July. That’s the smallest increase in four months.
Economists polled by Reuters had expected sales to increase by 0.4 percent overall and 0.3 percent minus autos, gasoline and building materials. Stripping out those items, core sales increased 0.1 percent after advancing 0.6 percent in July.
Retail sales account for about one-third of consumer spending, the main driver of economic growth. This report is one of the last pieces of data before next week’s Federal Reserve meeting, at which policymakers will decide whether to dial back quantitative easing.
Cars and light trucks continue to be the bright spot of the recovery. Sales of motor vehicles and parts increased 0.9 percent last month, after a 0.5 percent drop.
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In August, automakers reported another month of double-digit increases, selling 1.5 million vehicles, a 17 percent gain over the same month last year. That’s the highest level in more than six years. The full-year sales pace rose to 16.09 million for the first time since November 2007, the month before the Great Recession officially started.
Ford Motor Company (NYSE:F), Chrysler and General Motors Company (NYSE:GM) all posted double-digit gains over last August.
Receipts at building materials and garden equipment suppliers declined 0.9 percent. Sales at clothing stores fell 0.8 percent, the biggest fall in nearly 18 months.
Following the retail sales release, Barclays downgraded U.S. third-quarter gross domestic product growth to 1.5 percent, from 1.6 percent.
In a separate report on Friday, the Labor Department said wholesale inflation rose 0.3 percent in August, compared to expectations it would rise 0.2 percent. Excluding the food and energy segment, producer prices remained unchanged from July, while economists expected it to rise 0.1 percent.