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Home > Autos News > Sep > Retail Sales Posted Modest Increase In August as Autos Demand Jumped
Retail Sales Posted Modest Increase In August as Autos Demand Jumped
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Tepid retail sales and manufacturing in August offered more signs that the U.S. economy was softening as credit worries and market turmoil developed.

Overall retail sales gained 0.3% in August, the Commerce Department said Friday. But excluding a promotion-driven surge in auto sales and a drop in gasoline sales resulting from pump prices, retail sales fell 0.1%.

The Federal Reserve said total industrial production rose 0.2% last month, largely as a result of a surge in utility output, attributed to unusually warm weather. Manufacturing output dropped 0.3% in August, but that followed two months of particularly strong 0.7% growth.

The latest government reports on the economy "take some of the wind out of the argument that the economy was doing so well that it can withstand these financial market fluctuations and you don't really need to do anything," said Nigel Gault, an economist for forecasting firm Global Insight.

The data are unlikely to have a major impact on the outcome of Tuesday's meeting of Federal Reserve officials to decide whether to cut interest rates. The Fed is focused largely on the impact that recent developments in financial markets will have on the course of the economy in the months ahead.

The August retail sales data and upward revisions to July data led economists to conclude that consumer spending rebounded in the current quarter after a sharp second-quarter drop. But there were signs consumers were reluctant to spend last month. Lower gasoline prices in August had been expected to prompt consumers to spend more on other things, but restaurant sales were flat in August and clothing sales fell. Building-materials sales tumbled 1% for the month, and are expected to decline further as the housing sector continues weakening. The Commerce Department data reflect the survey of retailers covering the entire month, but are often revised after additional questionnaires are received.

One bright sign: The University of Michigan's index of consumer sentiment for early September rose to 83.8 from 83.4 last month, partly reversing August's plunge. The uptick reflects resilience in consumers' views of both current and future conditions. "Given the turmoil in financial markets, the slump in the housing market and deteriorating conditions in the labor market, that slight increase in confidence has to be seen as encouraging," Paul Ashworth, an economist at Capital Economics, said in a note to clients.


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