U.S. retail sales rose more than expected in August as higher gasoline prices boosted revenue at service stations.
retail sales increased by 0.6% last month, as reported Thursday by the Department of Commerce. July data was revised to show a 0.5% increase in sales instead of the previously announced 0.7%.
Economists polled by Reuters predicted retail sales would rise 0.2%. Retail sales are mostly sales and are not adjusted for inflation.
The increase in fuel prices last month may have hit the budgets of low-income families. Excluding gas stations, retail sales rose 0.2%.
Gasoline prices rose in August, hitting a high of $3.984 per gallon in the third week of the month, the highest this year, according to data from the US Energy Information Administration. In comparison, the price was $3.676 per gallon during the same period in July.
Amazon’s Prime Day promotion in July, which was the largest on record, and the fact that parents are starting to ramp up their back-to-school shopping, may have driven some spending. Online retail sales remain strong.
A darker view
Although spending remains supported by higher wages in a tight labor market, the outlook is darkening. Excess savings accumulated during the Covid-19 pandemic continue to be depleted. Credit card balances rose sharply and delinquencies hit their highest level in 11 years in the second quarter, according to data from the New York Federal Reserve.
Millions of Americans will continue paying off their student loans in October. Goldman Sachs estimates that this cost equates to a total of about $70 billion, or about 0.3% of disposable personal income.
Excluding autos, gasoline, building materials and food services, retail sales rose 0.1% in August. Data for July was revised to show that underlying retail sales rose 0.7% instead of the previously reported 1%.
The Gross Domestic Product growth estimate for the third quarter has so far reached an annualized rate of 5.6%. The economy grew at a rate of 2.1% in the April-June quarter.
The stability of the economy is highlighted by the labor market, which remains tense.
A separate report from the Labor Department showed Thursday that initial claims for state unemployment benefits rose a seasonally adjusted 220,000 in the week ended Sept. 9, up from 217,000 last week.
Economists predicted 225,000 claims for the final week. The period includes the Labor Day holiday, which may inject some volatility into the data. Applications are on the low end of the range of 194,000 to 265,000 for this year.