Retail Sales Up 1.1% Year-Over-Year

Retail industry sales for August (which exclude automobiles, gas stations, and restaurants) decreased 0.3 percent seasonally adjusted month-to-month and increased 1.1 percent unadjusted over last year, according to the National Retail Federation.

“The back-to-school season provided a slight boost to some companies,” said Rosalind Wells, NRF chief economist. “Unfortunately, retailers were not able to sustain the momentum they saw in the first half of the summer when families’ spending was being buoyed by the rebate checks.”

Consumers looking for bargains on back-to-school merchandise headed to discount and off-price retail stores, NRF said. Sales at general merchandise stores decreased 0.2 percent seasonally adjusted from July, but increased 4.6 percent unadjusted over last August. Electronics and appliance stores sales decreased 1.3 percent seasonally adjusted month-to-month and decreased 0.3 percent unadjusted year-over-year.

While sales at clothing and clothing accessory stores sales decreased 0.3 percent seasonally adjusted month-to-month, they increased 0.6 percent unadjusted from last year as shoppers took advantage of new fall merchandise, NRF said.

College-aged students and their families held back on purchases of dorm or apartment type merchandise, NRF said. Sales at furniture and home furnishing stores were flat from July and decreased 8.3 percent unadjusted year-over-year.

August retail sales released today by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) decreased 0.3 percent seasonally adjusted from the previous month and decreased 0.4 percent unadjusted year-over-year. 

Overall retail sales dropped in August for the second consecutive month “as the positive benefits from the fiscal stimulus rebates faded quickly into the sunset,” said Brian Bethune, chief U.S. Financial Economist for Global Insight, commenting on the Commerce Department figures.

He said real consumer spending is expected to contract by 1.1 percent in the third quarter.

“While the overall sales numbers were distorted by a drop in gasoline prices, sales in several key channels dropped, including electronics, building materials, and clothing,” Bethune said in his outlook. “Without the props from the fiscal stimulus rebates, consumer spending is slowly caving in.”

He added, “Employment is shrinking, household net worth is taking further negative hits from declines in stock prices and automotive valuations, and Americans are working harder for lower real wages.

“While momentum for consumer spending has evaporated, net exports continue to grow and that should keep the economy barely above water in the third quarter. However, the locomotive from overseas demand is running out of steam, so downside risks to growth in the fourth quarter of 2008 should not be underestimated.”