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Retail Sales: Surprise Drop

September 15, 2016
Bottom Line: Total retail spending fell in August, declining more than expected. Core retail sales slipped, seeing broad-based declines, including declines in categories that had been strong over the past year, health care and online, for instance. Both overall and core retail sales are still increasing on a year over year basis but have seen few upside surprises in the last 18 months. Core Sales ex-gasoline stations and ex-building materials during August were slightly below the Q2 average, suggesting that real consumer spending will be a drag on Q3 GDP.

Retail Sales FELL by 0.3% in August, compared with the market consensus for a decrease of 0.1%. The July estimate was revised higher from 0.0% to 0.1%. Retail sales are now 1.9% ABOVE their year ago level; just a year ago, the year over year growth rate was 2.1%. Spending at motor vehicle dealers fell by 0.9%.

Core Retail Sales FELL by -0.1%, compared with the market consensus for an increase 0.2%. The July estimate was revised no change from -0.3% to -0.4%. Core retail sales are now 2.0% ABOVE their year ago level; just a year ago, the year over year growth rate was 1.3%.

In August, gains at grocery stores (+0.3%), clothing stores (+0.7%), electronic and appliance stores (+0.1%), general merchandise stores (+0.0%). were more than offset by declines in building materials (-1.4%), gasoline stations, primarily due to low gasoline prices (-0.8%), miscellaneous retailers (-2.4%), nonstore retailers (-0.3%).

Core Retail Sales ex Gasoline FELL by 0.1% and are now 3.4% ABOVE their year ago level; just a year ago, the year over year growth rate was a moderate 4.0%.