Forecast-beating US retail sales data helped to temper worries about the world's number one economy
AFP

US retail sales in August 2025 exceeded expectations, rising by 0.6% from the previous month, according to the Commerce Department. This marks the third consecutive month of solid gains, driven by consumer spending across various sectors, including automobiles, apparel, online retail, and dining.

Core retail sales, which exclude automobiles, gasoline, building materials, and food services, also increased by 0.7%, reflecting continued consumer resilience. However, analysts caution that the boost may be partly due to higher prices, amid rising inflation and tariffs, Reuters reported.

Despite the positive retail performance, concerns over a weakening labor market persist. A New York Federal Reserve survey indicated that household spending growth hit a 4.5-year low in August, while Bank of America reported weakening wages for lower-income and Generation X consumers. These factors may dampen consumer confidence and spending in the coming months.

The Federal Reserve is expected to cut interest rates to support the lagging labor market and overall economy. While resilience remains in sectors like electronics and home purchases, analysts suggest consumer spending will likely decelerate in the coming months.

Retailers are preparing for a competitive holiday season, focusing on targeted promotions and enhancing online shopping experiences. While the outlook is positive, the sector must navigate economic uncertainties to maintain momentum.