U.S. Retail Sales Growth Slows More Than Expected In August

Partly reflecting a drop in sales by motor vehicle and parts dealers, the Commerce Department released a report on Friday showing retail sales in the U.S. increased by much less than expected in the month of August.

The Commerce Department said retail sales inched up by 0.1 percent in August after climbing by an upwardly revised 0.7 percent in July.

Economists had expected retail sales to rise by 0.4 percent compared to the 0.5 percent increase originally reported for the previous month.

The weaker than expected retail sales growth was partly due to the decline in auto sales, which slid by 0.8 percent in August after dipping by 0.1 percent in July.

Excluding the decrease in auto sales, retail sales rose by 0.3 percent in August after jumping by an upwardly revised 0.9 percent in July.

Ex-auto sales had been expected to climb by 0.5 percent compared to the 0.6 percent growth originally reported for the previous month.

The report showed notable increases in sales by miscellaneous store retailers and gas stations were partly offset by significant decreases in sales by clothing and accessories stores and department stores.

Closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, inched up by 0.1 percent in August after climbing by 0.8 percent in July.

"As the boost from the tax cuts starts to fade, spending growth is likely to continue slowing gradually over the coming months," said Andrew Hunter, U.S. Economist at Capital Economics.

He added, "For now, however, with the labor market continuing to tighten and inflationary pressures building, the strength of consumer spending growth keeps the Fed on course to continue raising interest rates once a quarter."

Compared to the same month a year ago, retail sales were up by 6.6 percent in August versus the 6.7 percent year-over-year increase in July.