US August retail report “solid”; “less impact on consumer” from Delta

Summary:  US retail sales rise by 0.7% in August, contrasts with -0.8% expected; report “a solid one”, suggests “less impact on consumer from Delta wave”; rises in all bar one retail categories; “vehicles and parts” the largest single influence, falls 3.6%.

US retail sales had been trending up since late 2015 but, commencing in late 2018, a series of weak or negative monthly results led to a drop-off in the annual growth rate below 2.0%. Growth rates then increased in trend terms through 2019 and into early 2020 until pandemic restrictions sent it into negative territory. A “v-shaped” recovery then took place which was followed by some short-term spikes as federal stimulus payments hit US households in early 2021.

According to the latest “advance” sales numbers released by the US Census Bureau, total retail sales increased by 0.7% in August. The rise was in contrast to the 0.8% decline which had been generally expected, as well as July’s 1.8% fall after it was revised down from -1.1%. On an annual basis, the growth rate remained unchanged from July’s revised figure of 15.7%.

US Treasury bond yields rose on the day. By the close of business, the 2-year Treasury yields had inched up 1bp to 0.22%, the 10-year yield had gained 4bps to 1.34% while the 30-year yield finished 2bps higher at 1.88%.

“In the end the report was a solid one…sales ex-autos jumped 1.8%, also well above the consensus…The jump in the core reading was boosted by downward revision to the July print but they were still a positive surprise, suggesting less impact on the consumer from the Delta wave,” said NAB currency strategist Rodrigo Catril.

All bar one of the categories recorded higher sales over the month. However, the “Motor vehicle & parts dealers” segment provided the largest single influence on the overall result, falling by 3.6% for the month while still remaining 10.7% higher for the year. Sales at ”non-store retailers” also had a significant influence on the total, rising by 5.3%.

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