Broad Based Improvements Lead Retail Sales Higher

Retail sales were much better than forecasts in August, boosted by gains in the auto sector but helped by broad advances too.

The headline index climbed 2.7% in August, easily beating predictions for a 2.0% figure.

“The upward momentum in retail sales in August was not merely a ‘cash-for-clunkers’ or higher gas price phenomenon,” said analysts at RDQ.

The cash-for-clunkers program helped sales at motor vehicles & parts dealers drive 10.6% in the month, compared with a 1.5% increase in the prior month.

Economists were expecting the rest of the report to be weak, but aside from declines in furniture sales (-1.6%) and building materials (-1.2%), all other categories reported advances. With autos excluded, sales jumped 1.1% on the month, almost tripling forecasts looking for a 0.4% gain.

• Electronics & Appliances: +1.1%
• Food & Beverage stores: +0.5%
• Health & Personal care stores: +0.4%
• Gasoline stations: +5.1%
• Clothing stores: +2.4%
• Sporting goods, hobby, book and music stores: +2.3%
• General merchandise: +1.6%
• Miscellaneous: +0.2%

“By itself, the August retail sales report points to 5% current quarter real GDP growth,” said Joseph LaVorgna, chief US economist at Deutsche Bank, who said further data is needed for confirmation, but in the meantime he is pencilling in a 4% gain in Q3 GDP.

Despite the monthly advance, total retail sales remain down 5.3% compared to 12 months ago, while retail sales excluding autos are down 6.2%. The annual declines are greatest for gasoline stations sales, which have fallen 26.7% from August 2008. Building material & supplies dealers are down a significant 13.6% from last year. 

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