Summary: Retail sales increases for fourth consecutive month; rise “disappointed”, less than expected; sales boosted by stores reopening; end of bonus $600 benefit “a likely key drag on further recovery”; majority of category segments increase sales over month; “Food, drinking places” the largest influence on total; US economy “losing momentum”, control group sales down by 0.1%..
US retail sales had been trending up since late 2015 but, commencing in late 2018, a series of weak or negative monthly results led to a drop-off in the annual growth rate below 2.0% by the end of that year. Growth rates then increased in trend terms through 2019 and into early 2020 until pandemic restrictions sent it into negative territory. A “v-shaped” recovery has since taken place.
According to the latest “advance” sales numbers released by the US Census Bureau, total retail sales increased by 0.6% in August. The gain was less than the 1.0% increase which had been generally expected and less than the 0.9% rise after revisions in July. On an annual basis, the growth rate increased from July’s revised rate of 2.4% to 2.6%.
“August US retail sales disappointed, rising 0.6%…with a material downward revision to the previous month,” said ANZ economist Daniel Been.
The report was released on the same day as the US Fed’s FOMC meeting finished and US Treasury bond yields moved moderately higher. By the end of the day; the US 2-year Treasury yield had crept up 1bp to 0.14% while 10-year and 30-year yields each finished 3bps higher at 0.70% and 1.46% respectively.
“Sales continue to be boosted by the reopening of stores, but the expiration of the supplementary $600 weekly unemployment benefit was a likely key drag on further recovery and will hinder further recovery,” said NAB currency strategist Rodrigo Catril.