The retail sales report for August contained few surprises and overall did little to sway opinions regarding the Fed’s crucial rate decision on Thursday.
Headline retail sales missed expectations by a narrow margin as they came in at 0.2% compared to 0.3% expected. Compensating however was an upward revision in July’s increase to 0.7% from 0.6% originally reported. It appears that the retail sales miss on a headline level had more to do with the drop in gasoline sales as the price of auto fuel fell substantially. In contrast to gas sales, auto sales were strong.
Retail sales ex auto and gas were up 0.3% compared to expectations of a 0.4% increase, but the revision of the previous month’s number was more substantial at +0.7% compared to 0.4%. In good news for the GDP figures of the third quarter, the retail sales control indicator, which closely tracks the consumption component used for GDP calculations, beat expectations by coming in at 0.4% but was also revised much higher at 0.6% from the 0.3% first estimate. Therefore third quarter GDP should be a strong one that could help the US economy towards a growth rate of 2% overall for the year.
Other reports of lesser importance were more negative, as Empire state manufacturing missed expectations by a wide margin and remained depressed after the previous month’s drop, while industrial production was also down more than feared during August.
The US dollar was mixed in the aftermath of the report, as it rose versus the yen and the pound but fell against the euro. Overall the numbers did not seem to have a major impact on trading sentiment.