Retail sales growth sluggish in August as consumers fight to keep up with inflation

The Census Bureau reported Thursday that retail sales numbers were better than expected in August as price increases across a number of sectors offset a decline in gas station receipts.

The increase in retail sales for the month was better than expected. Spending outpaced price increases in August and the total is not adjusted for that.

The consumer price index has risen over the past year, while retail sales have increased.

Excluding autos, sales fell below the estimate for a small increase. Sales were unaffected by autos and gas.

The 4.2% decline in gas station receipts was offset by a 2.8% rise in sales at motor vehicle and parts dealers. Bar and restaurant sales increased.

The July numbers were revised downward to show a decline of 0.4%.

The control group that economists use to measure retail sales was not changed from July. The group excludes sales from auto dealers, building materials retailers, gas stations, office supply stores, mobile homes and tobacco stores.

Peter Boockvar, chief investment officer at Bleakley Advisory Group, said that higher inflation drove the top line sales figure but volumes are falling. GDP estimates will be cut because core retail sales are below expectations.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said there was no cause for alarm. The slump in housing will affect some sales numbers, but overall spending should increase as incomes rise.

There was a lot of economic data today.

There were 213,000 initial jobless claims for the week ended September 10, a decrease of 5000 from the previous week and better than the 225,000 estimate. The import prices fell less than anticipated.

There was a huge jump in the New York Federal Reserve's Empire State Manufacturing index for September. The Philadelphia Fed's gauge came in at -9.9, a big drop from the 6.1 in August and below the expectation for a positive 2.3 reading.

Manufacturing was in a decline for the month according to the two Fed readings.

The reports pointed to some weakness in the prices. The prices paid and prices received in New York both fell, but both remained in growth territory with readings of 38.6 and 23.6. In Philadelphia, the prices received increased and the prices received decreased. Prices are still rising overall but at a slower pace according to the index.