U.S. Retail Sales Rise 0.6% in August, Beating Expectations
U.S. retail sales increased more than expected in August, supported by strong demand in e-commerce. The gain comes even as concerns grow over a weakening labor market heading into the final weeks of the third quarter.
According to the Commerce Department, retail sales rose 0.6% month-on-month, matching July’s upward revision and surpassing economists’ forecasts of just 0.2%. Retail sales mainly cover goods and are not adjusted for inflation.
Fed Decision in Focus
The figures arrive just one day before the Federal Reserve is set to announce its latest interest rate decision. Markets widely expect the central bank to cut rates by 25 basis points, with a slim chance of a larger half-point cut. The Fed is balancing sticky inflation with signs of a softening jobs market.
Analysts at Vital Knowledge said the data points to solid consumer spending, but stressed the Fed remains primarily focused on labor market trends.
Yearly Growth and Sector Highlights
Compared with last year, U.S. retail sales were up 5.0% in August. Online sales surged 2.0%, accelerating from July’s 0.6% rise. Motor vehicle sales climbed 0.5%, down from 1.7% the previous month, while clothing store sales grew 1.0%.
Sales of sporting goods, musical instruments, and bookstores — sectors more vulnerable to tariff-driven price pressures — rose 0.8%, easing from July’s 1.6% increase.
Consumer Sentiment Under Pressure
Despite resilient spending, worries remain that a weakening labor market and higher prices could slow momentum. The University of Michigan’s consumer sentiment index for September fell to its lowest level since May. Households reported concerns that tariffs could fuel inflation and reduce purchasing power.
Joanne Hsu, director of the University’s Surveys of Consumers, noted that both current and expected personal finances fell by about 8% in September, highlighting the risks to household budgets.
