U.S. retail sales fell more than expected in August amid weak purchases of automobiles and a range of other goods, pointing to cooling domestic demand that could further diminish expectations of a Federal Reserve interest rate increase next week.
The Commerce Department said on Thursday retail sales declined 0.3 percent after an upwardly revised 0.1 percent gain in July. Retail sales in July were previously reported to have been unchanged.
Sales were up 1.9 percent from a year ago. Excluding automobiles, gasoline, building materials and food services, retail sales slipped 0.1 percent last month after a downwardly revised 0.1 percent drop in July.
These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
They were previously reported to have been unchanged in July. Economists had forecast overall retail sales slipping 0.1 percent and core sales climbing 0.3 percent last month.
Coming on the heels of reports showing a slump in manufacturing activity in August and a slowdown in job growth, the retail sales data temper hopes of a strong rebound in economic growth in the third quarter.
The report also suggests the Fed will leave interest rates unchanged at its Sept. 20-21 policy meeting. Fed Governor Lael
Brainard said on Monday she wants to see stronger consumer spending data and signs of rising inflation before raising interest rates.
The Atlanta Fed is currently forecasting the economy growing at a 3.3 percent annualized rate in the third quarter.
Auto sales fell 0.9 percent last month and sales at service stations dropped 0.8 percent. Sales at online retailers slipped 0.3 percent and receipts at sporting goods and hobby stores decreased 1.4 percent.
There were also declines in sales at furniture and building material stores. Receipts at clothing stores, however, rose 0.7 percent. Sales at electronics and appliance outlets gained 0.1 percent and receipts at restaurants and bars rose 0.9 percent.
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