Americans continued to spend at a sustained pace over the past month in the face of rising covid-19 infections, although much of this has been done online and not in restaurants or other areas of the world. US economy besieged by the arrival of the delta variant.
Seasonally adjusted retail sales rose 0.7% in August from the previous month, the US Department of Commerce said Thursday. This increase surprised most economists. Consensus estimates were for a decrease of 0.85%, according to a survey of economists by FactSet.
Online sales soared 5.3% last month, while sales in restaurants and bars, many of whom believed they were going through the worst of the pandemic until delta arrived, were flat from month to month. previous.
This stagnation is “partly linked to the end of summer, but it is also linked to fear of the virus when walking into a bar,” said Beth Ann Bovino, chief US economist at S&P Global.
Earlier this year, as millions of people were vaccinated, restaurants, bars and other crowd-dependent places started to stir for the first time since early 2020. Then, in July, health officials Americans have recommended that even vaccinated people wear masks when indoors in public because of the delta’s uncontrolled spread, especially in areas of the country with low vaccination rates.
In the United States, hesitation over vaccines is cited by economists after the Department of Labor reported this month that employers created just 235,000 jobs in August, well below one million approximately jobs created in each of the previous two months.
Back-to-school shopping may have boosted retail sales. Department store sales rose 2.4% last month, according to the Commerce Department, as children returned to class and, perhaps for the first time in over a year, bought new clothes and other supplies.
Sales of cars and auto parts fell 4.5% in August. The auto industry has been hit by a shortage of computer chips, which has caused Toyota Motor Corp. recently announced its intention to reduce production by around 40%.
Consumer goods prices continued to climb in August, albeit at a slower pace, according to Labor Department data released this week. The consumer price index rose 5.3% in August from a year earlier, data showed, suggesting inflationary pressures were starting to ease.
Bank of America analysts said Thursday that spending on clothing increased 27% for the week ending September 11 compared to the same period last year, based on credit and debit card data. The analysis also found that department store sales rose 21%, while spending on furniture rose 9% compared to the same period last year.
“Households are sitting on a lot of money,” Bovino said. “We expect to see a strong holiday spending season.”
The retail report released Thursday only covers about a third of overall consumer spending and does not include services such as haircuts, hotel stays and airline tickets. It is clear that spending has declined in some of these industries. Airlines, for example, recently reported declining ticket sales and blame the spread of the delta variant.
Auto sales continued to decline over the past month, likely because fewer cars were produced due to a pandemic-related shortage of chips, which are needed to power displays and other technological features in cars. Auto dealer sales fell 3.9% last month, the Commerce Department said.
Some economists are still hoping for a larger increase in consumer activity this year. The four-week average of jobless claims, which smooths out fluctuations in weekly data, fell for the fifth week in a row, the Labor Department said Thursday. It is now at the lowest since the start of the pandemic.
More people are finding jobs and many of those who have stayed have saved money during the pandemic and will have more to spend, said Sal Guatieri, senior economist at BMO Capital Markets.
“The surprising recovery in retail sales in August supports this positive message,” Guatieri wrote.
However, it all depends on the ability of the United States to contain the spread of the virus.
The Labor Department also reported Thursday that the number of Americans seeking unemployment benefits rose from a pandemic low last week, a sign that the spread of the delta variant may have increased layoffs slightly.
A surge in covid-19 infections, rising prices and persistent supply chain challenges have led to a wave of downward revisions to third-quarter economic growth forecasts in recent weeks.
“Although spending on goods has been much higher than expected, this will likely only add to the shortages seen in recent months, while stagnating spending in restaurants and bars suggests that the broader recovery in consumption services has probably faltered, ”Michael Pearce, senior US economist at Capital Economics, said in a note.
Information for this article was provided by Joseph Pisani of The Associated Press, Coral Murphy Marcos of the New York Times, and Reade Pickert of Bloomberg News (TNS).