Business

Friday 22 August 2014

Lower than expected US retail sales point to slow economic growth

Published 13/09/2013 | 14:09

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Retail sales increased 0.2pc last month

US retail sales rose less than expected in August even as demand increased for automobiles and other big-ticket items, the latest sign that economic growth slowed in the third quarter.

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The Commerce Department said today retail sales increased 0.2pc last month as Americans bought automobiles, furniture and electronics and appliances.

However, they cut back on clothing, building materials and sporting goods.

Retail sales, which account for about 30pc of consumer spending, were still up for a fifth consecutive month.

They had gained 0.4pc in July and economists polled by Reuters had expected them to rise 0.4pc last month.

Stripping out automobiles, gasoline and building materials, so-called core sales were up 0.2pc after rising 0.5pc in July. Core sales correspond most closely with the consumer spending component of gross domestic product.

Though core sales slowed a bit from July, they matched the second quarter's 0.2pc average monthly gain.

Despite the signs of a slowdown in demand this quarter, that will not change expectations the Federal Reserve will announce cutbacks to its huge monthly bond purchasing program at next Tuesday and Wednesday's policy meeting.

The retail sales report added to July data on consumer spending, industrial production, housing starts and durable goods orders that have suggested growth took a step back from the first quarter's 2.5pc annual pace.

Sales at auto dealerships rebounded 0.9pc last month after falling 0.5pc in July. Excluding autos, sales nudged up 0.1pc after rising 0.6pc the prior month.

Sales at building materials and garden equipment suppliers fell 0.9pc. Clothing store receipts declined 0.8pc, the biggest fall in nearly 1-1/2 years, reflecting weak back-to- school sales. That may not be a good sign for the holiday season.

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