Sales at U.S. retailers dropped more than forecast in August, indicating a pause in recent consumer-spending strength that has carried the economy.
Purchases declined 0.3 percent from July, the first drop in five months, after a revised 0.1 percent advance in the previous month, Commerce Department figures showed Thursday in Washington. The median projection of economists surveyed by Bloomberg called for a 0.1 percent decline. Excluding cars, sales unexpectedly fell 0.1 percent.
An easing in vehicle buying matched a lackluster performance elsewhere, with sales falling in seven of 12 retail categories outside autos. While low borrowing costs, cheap gasoline prices and steady job gains should keep a floor under demand, wage growth remains slow and sustained weakness in consumer spending could limit any second-half economic rebound.
"The consumer may lose a little momentum, but not much — it still probably will be one of the areas of strength in the economy," David Sloan, senior economist at 4cast Inc. in New York, said before the report. "The key to consumer spending is going to be real disposable income. That's been supported by past falls in gasoline prices, so we'll have to see where oil heads in the coming months."
Fed debate is next
The report represents one of the last major data releases before Federal Reserve policy makers meet next week to debate raising interest rates. While officials are split on the urgency to increase borrowing costs, most investors and economists expect the central bank to hold off this month.
Estimates of retail sales in the Bloomberg survey ranged from a decline of 0.8 percent to a 0.2 percent gain. July's figure was revised from an initially reported reading of no change.
Core sales, the figures that are used to calculate gross domestic product and which exclude such categories as autos, gasoline stations and building materials, declined 0.1 percent last month. July's reading was revised to a 0.1 percent decrease after an initially reported reading of no change.
Purchases at auto dealers dropped 0.9 percent and those at service stations fell 0.8 percent as fuel costs were slightly lower on average in August.
The auto figures are in line with industry data showing a slowdown. Sales of cars and light trucks eased to a 16.91 million annualized rate in August after 17.77 million in July that was the strongest in eight months, according to Ward's Automotive Group figures.
Outside of autos, purchases fell 1.4 percent at building materials stores and dropped by the same percentage at sellers of sporting goods, books and music. Food and beverage store spending was up 0.3 percent and clothing gained 0.7 percent.
The decline in retail sales excluding autos follows a 0.4 percent decrease in July that was revised lower, according to Thursday's report. They were projected to increase 0.2 percent, according to the Bloomberg survey median.