NRF: Retail sales improved more than expected in August

Consumer spending in August ticked higher and pushed overall retail sales – excluding automobiles and fuel – up 2.11% from a year ago. Core retail sales that also exclude restaurants increased 1.93% from a year ago, according to the National Retail Federation.

The modest increase was attributed to consumers seeking more promotional pricing with back-to-school expenditures and stretching their purchases out over July, August and September.

The CNBC/NRF Retail Monitor also reports total retail sales were up 2.08% for the first eight months of the year. Over the same period, core retail sales increased by 2.33%, led by clothing, accessories and online sales. The Retail Monitor sales results are derived from credit and debit card purchases at retail establishments but are not adjusted for inflation.

Retail Monitor reports August sales were up in five of nine categories year over year. Online sales jumped 17% year over year, buoyed higher by more online promotions around Amazon Prime Day and other retailers joining the bandwagon. Clothing and accessories sales rose 11.4% from a year ago and health and personal care sales increased 6.7%. Food and beverage sales ticked up 2.5% in August and general merchandise sales were up 1.9% year over year.

Categories that continue to see weaker year-over-year sales were electronics and appliances, down 2.54%. Furniture and home furnishing sales decreased by 2.57%, building and garden supply sales fell 2.89%, and sporting goods, hobby, books and music sales tumbled by 10.78%, the report states.

“Retail sales data shows that consumers continued to spend on household priorities in August,” said NRF CEO Matthew Shay. “This is despite a slowing labor market that is expected to prompt the Fed to finally lower interest rates in September. Even with slower employment growth, unemployment is near historical lows and ongoing job and wage gains coupled with lower inflation should keep consumers on solid footing heading into the holiday season.”

The Census Bureau reported Tuesday that overall retail sales rose 2.1% year over year and inched 0.1% higher from July. Retail sales slowed from the rates reported in July but were still deemed positive by Wall Street analysts and NRF Economist Jack Kleinhenz.

“These numbers show the continued resiliency of the American consumer,” Kleinhenz said. “While sales growth decelerated from last month’s pace, there is little hint of consumer spending unraveling. Households have the underpinnings to spend as recent wage gains have outpaced inflation even though payroll growth saw a slowdown in July and August. Easing inflation is providing added spending capacity to cost-weary shoppers and the interest rate cuts expected to come from the Fed should help create a more positive environment for consumers in the future.”

Core retail sales from August as reported by the Census Bureau rose 3.3% from a year ago and ticked up 0.3% from July. Core sales exclude automobile, gasoline and restaurant sales. Core sales increased 3.4% from the first eight months of the year which falls in line with the NRF forecast range of 2.5% to 3.5% over last year.

Online sales were also a bright spot in the Census Bureau data rising 7.8% from last year. Restaurant sales increased 2.7% from the same period last year. Through the first eight months of this year, online sales are up 8.3% and restaurant sales increased 5.3%, according to the Census Bureau.