US retail sales grew more strongly than expected in August, underscoring the resilience of consumer spending even as broader economic conditions showed signs of weakness.
The Census Bureau reported Tuesday that retail sales rose 0.6% from July, well above the 0.2% gain economists had projected.
Sales totalled $732 billion for the month, an increase of 5% compared with August 2024.
Revisions to earlier months also showed firmer momentum, with July’s sales growth adjusted up from 0.5% to 0.6%.
Over the three months from June through August, sales rose 4.5% from the same period a year earlier.
Nonstore and restaurant sales drive growth
Retail trade sales advanced 0.6% from July and were up 4.8% from a year earlier.
Nonstore retailers, which include e-commerce platforms, recorded a 10.1% annual increase, while food service and drinking places posted a 6.5% rise compared to August 2024.
Other industry data pointed to steady demand in discretionary categories.
The CNBC/NRF Retail Monitor found that clothing and accessories stores saw a 0.2% month-over-month increase after seasonal adjustments, and an 8.3% rise from a year earlier without adjustments.
NRF president Matthew Shay noted that consumer spending was supported by lower fuel costs, tax-free holidays and advance purchases ahead of expected tariff increases.
“We may be seeing inflationary impacts from tariffs since recent data shows price increases in commodity goods,” he said.
Resilient spending despite weak jobs data
The strong retail sales figures stand in contrast to a labour market that has recently lost momentum.
US employers added relatively few jobs through the summer, with payrolls declining by 12,000 in June.
The unemployment rate rose to 4.3% in August, the highest since 2021.
Revisions to employment data for 2024 indicated nearly one million fewer jobs were created in the 12 months through March than previously thought, the sharpest revision in decades.
“This makes the consistency of retail spending all the more remarkable,” wrote Glenmede strategists Jason Pride and Michael Reynolds, who argued the numbers highlight a baseline resilience in household consumption.
Credit card data supports firm spending
Additional evidence of steady consumer demand came from Bank of America, which reported that aggregate credit and debit card spending rose 0.4% in August and 1.7% year on year.
Spending accelerated across both lower- and higher-income households, according to BofA economist Aditya Bhave.
Bhave said the divergence between spending and job growth is unlikely to persist for long.
Either consumption will soften as households become more concerned about employment prospects, or the labour market will rebound to align with the strength in spending.
He expects the latter scenario, arguing that consumer demand will remain robust in the months ahead.
Outlook remains cautiously optimistic
Stephanie Link, chief investment strategist at Hightower Advisors, also leaned toward a positive outlook.
She highlighted recent comments from executives at Bank of America, Wells Fargo and Walmart, all of whom emphasised the continued health of consumer demand.
Despite ongoing concerns about inflation and tariffs, analysts suggested that consumers remain willing to spend, providing a key source of support for the economy as it navigates a period of uneven growth.
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