Despite a sharp drop in car sales due mainly to production shortages, U.S. retail sales in August rose 0.7%, the Commerce Department reported Thursday. The figure beat a Dow Jones estimate of a 0.8% decline and suggested that the economy can withstand the effects of the Delta variant.

Meanwhile, the Labor Department reported that initial jobless claims totaled 332,000 in the week ending Sept. 11, compared to the expected 320,000 by Dow Jones.

“On the face of it, it is disappointing but not entirely surprising to see a slight increase in new jobless claims given the toll taken by the Delta variant. Countering that somewhat is the decline in continuing claims to a fresh pandemic-era low," Mark Hamrick, senior economic analyst at Bankrate, said in a statement.

Economists predicted lower sales numbers assuming consumers would reduce spending.

Problems with the Delta variant have led to some economists forecasting declines in economic growth in the third quarter. JP Morgan Chase on Wednesday projected GDP to expand at a 5% annual rate in July through September, down from 7%, citing lower demand and product shortages.

The pandemic still impacted bars and restaurants which were stagnant for the month but marked a 31.9% increase from a year ago.

Sales remained strong for most of the month as back-to-school shopping led to an increase in economic activity. Despite an increase in jobless claims and auto sales falling 3.6%, much of the economy was able to experience mild gains amid fears of the Delta variant and increased hospitalizations.

Online sales rose 5.3% and furniture and home sales experienced a 3.7% increase, while general merchandise saw a gain of 3.5%. Electronics and appliances experienced a 3.1% drop and sporting goods and music fell 2.7%. Overall, sales were able to increase by 15.1% from a year ago.

Economists believe the economy could recover as more people get vaccinated.

“I think consumer spending is taking a significant hit in August and probably September, but I don’t think there’s going to be lasting damage,” Stephen Stanley, chief economist at bond trading firm Amherst Pierpont, said before data was released Thursday.