August 2017 Retail Sales

Consumers were unwilling to increase their outlays in August 2017 according to the latest data from the Census Bureau.  In fact, they spent less in the period than in July.  Including the 0.2 percent monthly decline, the year-over-year statistic decelerated to 3.2 percent from 3.5 percent at the start of the third quarter.  Adding to the dour tone of this release, July’s tally was revised lower to 0.3 percent (originally 0.6 percent).

Declines were abundant in the report.  Motor vehicle sales suffered a decline of 1.6 percent and are now just 1.7 percent higher than a year earlier.  Electronics & appliance stores fell 0.7 percent in the period.  Do-it-yourselfers did less in the period as building material & garden equipment sales fell 0.5 percent.  Fewer dollars were spent on clothing as well, down 1.0 percent.  Even receipts at non-store retailers declined 1.1 percent.  Fortunately, Atlas’ favorite category provided a reprieve from the negative signs.

We pay close attention to the category of food and beverages away from home.  It was the silver lining of this otherwise disappointing iteration of Retail Sales.  Americans increased spending on meals and drinks away from home by 0.3 percent.  In the past year, this highly discretionary component rose 2.3 percent, decelerating from 2.8 percent in July.

Retail sales have been trending higher, so this setback might be short-lived, but this monthly decline was surprising nonetheless.  Unfortunately, issues related to the devastating hurricanes of late August and early September are sure to skew this indicator for months.  Going forward, Atlas will focus on year-over-year data to help filter out some of the noise created by these exogenous shocks to the economy.