Soft August Retail Sales A Temporary Hitch? 5 Stocks To Buy

U.S. retail sales showed continued rise going into August but the rate of growth fairly moderated, as bargain hunters took a breather after an extravagant July. As Americans refrained from splurging on automobiles and apparel, retail sales showed a slight uptick in six months.

Analysts also cited high gasoline prices as one of the prominent reasons behind soft sales in other categories. Nevertheless, an upwardly revised July sales data suggests that the economy is firm, given solid labor market, tax reform and rising income. Consumer spending — one of the pivotal factors driving the economy — is also likely to retain strength. However, the impact of escalating trade war tensions with China cannot be brushed aside.

Retail Sales Growth Slows

The Commerce Department stated that U.S. retail and food services sales in August inched up 0.1% to $509 billion, following an upwardly revised reading of 0.7% gain in July. Notably, retail sales improved 6.6% from August 2017.

The report suggests that sales at motor vehicles and parts dealers fell 0.8%, while sales at furniture & home furnishing stores declined 0.3%. Meanwhile, sales at clothing & clothing accessories decreased 1.7%, while at department stores the metric slid 1%. Sales at both food & beverage stores and building material dealers remained flat.

We note that receipts at gasoline stations rose 1.7%, while sales at electronics & appliance stores improved 0.4%. Sales at non-store retailers climbed 0.7% and also improved 10.4% from the prior-year period. Sales at sporting goods, hobby, book & music stores jumped 0.2%, while at food services & drinking places the same increased by an equivalent rate, following an upwardly revised data of 1.6% in July.

Is This a Temporary Blip?

Industry experts believe that the slowing of retail sales in August may be a temporary phase, given the underlying strength in the economy as of now. Moreover, the National Retail Federation’s projection of a tick-up in U.S. retail sales of at least 4.5% this year hints at increasing basket size and more traffic with retailers as ultimate gainers.