UPDATED--Retail sales increased less than expected during August compared to the month before, but are up significantly compared to a year ago.
New U.S. Commerce Department figures show a month-over-month gain of 0.2% while it increased 4.7% from August 2012. The month-to-month increase was about half of what various consensus polls of economists were expecting. July sales were revised up from 0.2% to 0.4%.
Auto sales rose 0.9% in August, more than reversing last month’s 0.5% decline. Excluding autos, sales rose just 0.1% in August, a disappointing monthly increase following a 0.6% rise the month prior, revised up one-tenth from 0.5%, and the weakest monthly reading since April.
Sterne Agee chief economist Lindsey Piegza says this retail sales report was disappointing as back-to-school shopping fell short. “Aside from autos, consumers were hesitant to loosen their purse strings, cutting back on non-essential, discretionary purchases,” she said. “Consumption has been lackluster volleying at a near 2% rate through the first half of the year. With income growth of less than 1% and waning momentum in the jobs market, consumption is likely to falter further. And while the Fed isn’t necessarily watching the monthly retail sales data as a catalyst to policy change, a slowdown in spending is indicative of underlying weakness."
Retail sales are a closely watched barometer of the U.S. economy because consumer spending drives about 70% of all such activity.
A separate report is just as discouraging, showing consumer confidence in the U.S. economy fell this month.
It declined to a five-month low, according to the Thomson Reuters/University of Michigan survey hitting 76.8 in September, the lowest since April. That was below the August reading of 82.1 and the 82 reading economists had expected for this month.
The decline was due to "growing concerns that higher interest rates will diminish the pace of economic growth as well as job gains, " said survey director Richard Curtin.
Also consumer expectations fell to an eight-month low of 67.2 from 73.7 in August, with only one in four households expecting to be better off financially in the year ahead. Curtin said “a cooling housing market has also affected homeowners' sense of personal financial progress.”
Update adds consumer confidence report.