Retail sales in the U.S. rose 0.7% on a monthly basis to $618.7 billion in August, the Commerce Department said on Thursday. The rebound comes after retail sales plunged by a revised 1.8% in July and after U.S. consumer prices rose at a more moderate pace in August.
Economists had forecast retail sales to decrease by another 0.8% compared to the 1.1% slump previously reported.Â
With the initial market reaction, the greenback gathered strength against its rivals, and the US Dollar Index was last seen trading at a fresh daily high of 92.82, rising 0.4% daily.Â
The sale of retail products in the U.S. was likely boosted by back-to-school shopping and child tax credit payments from the government.Â
Join our Trading Community for more signals!
The rebound comes despite a continued shortage of microchips, which forced automakers to cut production, leading to scarcity. The semiconductor crunch, worsened by the latest waves of COVID-19 infections, is also causing mass shortages in electronic products. Congestion at Chinese ports is also making matters worse.
Excluding sales by automobiles, food services, building materials, and gasoline, retail sales rebounded 2.5% last month after a revised 1.9% decline in July.
Core retail sales correspond most closely with the consumer spending component of gross domestic product (GDP). The so-called core retail sales were estimated to fall 1.0% in July.
Growth cuts
Poised by tanking vehicle sales, economists are slashing their GDP growth estimates for the third quarter of 2021. Economists at JPMorgan on Wednesday trimmed their GDP growth forecast from 7.0% to 5.0%. Early this month, Goldman Sachs cut its estimates from a 5.25% pace to 3.5%.
The slowing momentum was supported by the Fed’s “Beige Book” report that showed economic growth was plummeting. The economy grew at 6.6% in the second quarter of this year.
Economists, however, expect domestic demand to grow next quarter if the Delta variant fades.
Join our Trading Community for more signals!
