US retail sales rise ahead of September trade tariffs

The US consumer continued to splash out at a greater than anticipated pace last month, as Americans tried to front-run the incoming trade tariffs at the start of September.

According to the Department of Commerce, retail sales volumes grew at a 0.4% month-on-month pace in August to reach $526.06bn (consensus: 0.2%).

And the previous month's rise in total retail sales volumes was also revised higher, from 0.7% to 0.8%.

In comparison to a year ago, total retail sales climbed by 4.1% in August.

A 1.8% jump in purchases at motor vehicles and parts dealers to reach $106.2bn accounted for the bulk of the increase versus July, followed by a 1.4% rise to $31.9bn in those of building materials and garden equipment.

Excluding sales of motor vehicles and parts however, retail sales were flat month-on-month.

Gasoline station sales meanwhile shrank by 0.9% to $42.57bn, as lower energy prices exerted a drag.

Sales of clothing, at general merchandise stores, of furniture and at food and beverage stores all declined as well.

Commenting on the data, Ian Shepherdson, chief US economist at Pantheon Macroeconomics, said that the modest 0.3% month-on-month increase in core retail sales was "nothing to worry about" in light of the 1.0% jump in the control group of retail sales seen in July.

"The big picture is what counts," he explained.

"The Redbook chainstore sales numbers clearly suggest that consumers have stepped-up their spending in recent weeks, presumably seeking to get ahead of the impact of the first wave of tariffs on consumer goods, which were applied on September 1."

His forecast was real household consumption to grow at an annualised pace of %3.0-3.5% over the third quarter "but at the expense of the fourth quarter" when spending would slow to about 2.0%.

"For now, the consumer looks strong, but the outlook is deteriorating as confidence falters in the face of the tariffs and, over the next few months, slowing job gains."