Retail sales show signs of strength

US retail sales unexpectedly picked up in August, but the details within the report were less straightforward and still left economists debating as to how much the #FederalReserve will cut interest rates by at tomorrow's meeting. The value of retail purchases, unadjusted for inflation, increased 0.1%, supported by online purchases that masked more mixed results at other merchants. So-called control-group sales — which are used to calculate gross domestic product — rose at a robust 5.7% annualized pace in latest three months, the fastest rate since August 2023. Some economists pointed to the gains as evidence of resilient consumers who are maintaining spending despite cooler wage growth, supporting a 25-basis-point rate cut. Others suggested shoppers have grown more frugal as the saving rate has dropped, which should nudge the Fed toward a bigger 50-basis-point reduction. Read our full story here for Bloomberg News:

Consumers and investors remain in a buying mood #Investors liked what they saw in this morning’s release of the U.S. retail sales report for August, with the S&P 500 Index inching higher in early trading to within 10 points of its all-time high. Headline retail sales grew +0.1% month over month, handily outpacing expectations for a -0.2% contraction, while July’s +1.0% reading was revised up to +1.1%. Excluding autos, retail sales rose +0.1% from July, modestly missing the +0.2% forecast. With #markets deeming a Federal Reserve rate cut to be a foregone conclusion at tomorrow’s policy meeting, this morning’s report has done little to change that narrative. Market odds currently favor a 50 basis points (bps) cut instead of a more moderate 25 bps. The size of the rate cut aside, we believe the next move for markets will be driven more by (1) the Fed’s “dot plot”, an official projection of the direction and magnitude of rate changes, and (2) commentary from Fed Chair Powell’s post-announcement press conference. #Litrendingtopics

As we do every month, Retail Dive crunched the U.S. Census Bureau's retail sales figures for the sectors we cover. The consumer remains cautious, analysts tell me, but they spent on discretionary goods nevertheless. Thanks to the sources who provided their insights: https://lnkd.in/eG5XxF7

🚨 News Release - Retail Sales Update 🚨 U.S. retail and food services sales for August 2024 reached a new monthly record high of $710.8 billion, reflecting a slight increase of 0.1% from July 2024 and a modest 2.1% year-on-year increase from August 2023. 📊 📈 Upward Revision The June 2024 to July 2024 month-on-month percent change was revised up from 1.0% to 1.1%. Key Data Points ➡ Total sales from June 2024 to August 2024 are up 2.3% compared to the same period last year. ➡ Retail trade sales saw a 0.1% increase from July 2024 and a 2.0% rise from last year. 🛍️ ➡ Nonstore retailers are booming, with a 7.8% increase compared to last year! 🚀 ➡ Food services & drinking places saw a 2.7% uptick from August 2023. 🍽️ Retail data continue to evolve, and these numbers reflect ongoing growth, which is positive for the #economy. What do you think this report means for the Fed and #markets? Follow me - Jason Schenker - for regular economic and market updates.

August Retail Sales: Households Still Spend a Lot on Goods Retail trade (i.e. retail sales pertaining to goods) went up 0.1% over the month in August vs. expectations of a 0.2% decline, with July retail sales being revised up from 1% month/month to 1.1%. As always, it's crucial to remember to not take these figures at face value without looking under the hood: ➡️ Retail sales measures spending on goods as well as bar/restaurants spending. Thus it really mostly measures goods consumption which is a relatively small slice of the monthly consumption basket, as about 2/3 of U.S. consumption expenditures relates to services. ➡️ Retail sales does not correct for changes in prices, which for goods in particular can make a big impact. As such less strong retail sales growth could merely reflect more moderate price increases while retail sales volumes grew at a healthy rate. Dissecting retail sales into subcomponents and aligning them with corresponding CPI subcomponents provides a more accurate assessment. The chart 👇 shows that, in inflation-adjusted terms, 1️⃣ Core goods spending (inflation-adjusted retail sales excl. gasoline stations) have improved notably on a three-month basis compared to H1 2024, as is evident from the chart 👇. Although the pace of annualized three-month growth eased ever so slightly in August vs July at 6.5%, we do have to go back to Q1 2023 to find a similar pace of real spending growth for core goods. 2️⃣ Core goods spending excluding motor vehicles went up at a somewhat accelerated pace in August relative to July (orange line in chart 👇). In fact, the three-month growth rate in August (7.6% annualized) ran at the second highest pace seen over the past two years (the highest was June). 3️⃣ Bar and restaurant spending remained downbeat in inflation-adjusted terms, however, although it shrank a lot less than in Q1. We continue to see strong inflation-adjusted retail spending activity on goods, with growth rates that have been accelerating since the first half of the year. This bodes well for inflation-adjusted spending growth in the more complete August PCE report later this month, and the resulting healthy pace of household spending signals that a recession, for now, should not be a base case for the U.S. economy. #retailsales #consumption #economy

August’s retail sales data beat market expectations It strengthens our case that growth, especially consumer spending, should remain strong in the third quarter. The topline sales number showed an increase of 0.1% for the month—much closer to our forecast of a 0.2% increase compared to the market consensus forecast of a 0.2% decline. More importantly, since retail sales data mostly cover goods purchases, the underlying spending strength should be even greater after adjusting for inflation, as goods prices actually dropped in August, according to the consumer price index data. After accounting for the change in goods prices, we believe retail sales volume should increase by 0.2% to 0.3% for August. Similarly, the key control group, which feeds into GDP calculations for the third quarter, should grow by 0.4% to 0.5% on an inflation-adjusted basis. If we continue to see similar results in September, goods spending in the third quarter could surpass last quarter’s performance, which grew by 3.0% on a quarterly annualized basis. 🔺 This data should clearly temper the market’s concerns about a growth scare, which has triggered calls for a 50-basis-point cut from the Fed this week. With this solid data, we believe there is a much higher chance that the Fed will move forward with a 25-basis-point cut. Amid heightened economic and political uncertainty, we see no reason for an out-of-order jumbo cut, which would only fuel more volatility.

A closer look at the 0.1% August retail sales print misses the fulcrum of the spending shift. #Ecommerce 📈 is booming! August retail sales show online shopping leading the pack with a 1.4% jump 💪. Gas stations ⛽ and electronics stores 📺 took a hit, but overall it's a mixed bag 🤷♀️. #RetailTherapy #OnlineShopping #EconomicPulse

EY Macro Pulse 🛒 August retail sales signal consumer prudence 🛍️ #Retail sales beat expectations, but only rose a shy 0.1% in August. Given muted expectations, this is a decent reading that once again confirms consumers are spending more prudently, but not retrenching amid elevated prices and rates and reduced labor market momentum. 📚 Solid online sales and back-to-school purchases offset weakness in autos, groceries, clothing, furniture, electronics, and gas station sales. Spending at restaurants and bars was flat. Adjusted for #inflation, total retail sales fell 0.1%. 📈 Control retail #sales – a key gauge of consumer spending trends that strips out volatile retail segments – posted a modest 0.3% increase following an upwardly revised 0.4% gain in July. Adjusted for inflation, core retail sales only advanced 0.2% on the month. 💼 #Consumers are spending with increased prudence amid slower income trends. Momentum in retail sales has slowed from 5.5% y/y in December 2023 to 2.1% y/y in August, but in inflation-adjusted terms, retail sales were down 0.5% y/y. While we don’t anticipate a retrenchment in consumer spending, given still relatively healthy household finances, we’re bound to see slower household outlays in the final quarter of the year and into 2025. 🤔 How does this report influence #Fed policymakers on the first day of the #FOMC meeting? Not much. We remain of the view that the Fed will opt for a 25bps rate cut to start its easing cycle. While a couple of news articles published during the Fed’s communication blackout-out period fueled speculation that the Fed would lean in favor of a 50bps cut, we believe gradualism will prevail instead of the optimal front-loading of rate cuts. Read the note here via EY EY-Parthenon https://lnkd.in/dmpGXN_m

US RETAIL SALES HOT 🔥 OR NOT 🔻? Here are my thoughts on today's report and how it impacts the Fed's FOMC meeting #forextrading #forex #daytrading #daytrader https://lnkd.in/e2cbM3iU

Stocks are pointing up this morning, following a surprise increase in retail sales which boosted confidence in the U.S. economy ahead of Fed’s next rate decision. Retail sales in the U.S. unexpectedly rose by 0.1% in August, signaling strong consumer demand. The increase was driven primarily by strong online shopping activity. This uptick followed a revised 1.1% gain in July, defying expectations of a 0.2% decline. Excluding autos and gasoline, sales increased for the fourth consecutive month, reflecting continued spending strength. Not to get too technical, but the data highlighted that the “control group” sales, which are used to calculate GDP, rose by 0.3%, matching expectations.