Retail sales in the United States defy expectations with a rebound in August

US Retail Updates

Retail sales in the United States rebounded in August as shoppers stocked up on school supplies and home decor, a sign of their willingness to spend.

Sales were up 0.7% from the previous month, the Census Bureau said Thursday. The increase thwarted analysts’ expectations for a 0.8% drop, after a resurgence of the coronavirus and rising prices appeared to shake consumer confidence. In July, sales fell 1.8 percent, from an initial estimate of a drop of 1.1 percent.

Demand at department, home improvement and furniture stores, as well as higher online spending, contributed to the sales increase in August. Grocery stores also posted gains, a sign of resilient demand for food consumed at home. Sales in the foodservice category, which includes bars and restaurants, remained stable.

Car dealerships and electronics stores – two sectors under pressure computer chips – posted weaker sales.

Oxford Economics analysts noted that supply chain issues and the spread of the Delta coronavirus variant have influenced spending patterns. While consumers have spent a lot of money on e-commerce orders and home furnishings, they have also “been more cautious about dining out and restrained purchases of products that have become. more expensive and harder to find, such as cars and electronics ”.

Consumers said they felt much less optimistic about the economy and their own finances last month in a University of Michigan survey, which called the results a “staggering loss of confidence” in response to a rise in prices. cases of coronavirus. Consumers are also going through a period of higher prices. Inflation in August hovered near a 13-year high, although month-over-month price gains have moderated.

But economists noted that overall spending remains strong, aided by high levels of consumer savings and a labor market recovery.

Retail sales, including food services, remain well above pre-pandemic levels. Major retail chains, including Walmart, Target, and Home Depot, have booked solid quarterly revenues at the beginning of the summer, supported by the back-to-school races and the owners who embark on new projects.

Consumers have also allocated a portion of their spending to experiences not captured by retail data, allocating more to things like travel, accommodation, and tickets to concerts and sporting events now than many. restrictions on coronaviruses have been lifted.

Short- and long-term US Treasury bond yields hit session highs immediately after the data was released. The benchmark 10-year yield, which moves in line with economic expectations, increased 0.05 percentage point to 1.35%.

Shorter-term yields, which move with interest rate expectations, also rose as investors raised bets that the Federal Reserve could take the first step towards unwinding monetary policy during a downturn. pandemic at its meeting next week.

On Wall Street, the S&P 500 Index, the tech-focused Nasdaq and the Dow Jones Industrial Average all fell. While retail sales data supported some areas of the market, these gains were offset by weakness in the tech sector.

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