U.S. retail sales unexpectedly fell in August as Hurricane Harvey likely depressed motor vehicle purchases, suggesting a moderation in consumer spending in the third quarter.
Figures released Friday by the U.S. Commerce Department indicated retail sales dropped 0.2% last month. Data for July was revised to show sales increasing 0.3% instead of the previously reported 0.6% jump. Economists had forecast retail sales nudging up 0.1%.
Motor vehicle sales tumbled 1.6% last month, the biggest drop since January, after being unchanged in July. Number-crunchers are reckoning that Harvey, which slammed Texas in the last week of August and unleashed unprecedented flooding in Houston, probably hurt sales of automobiles, restraining overall retail sales.
Auto sales are, however, expected to get a boost from the replacement of flood-damaged vehicles. Overall retail sales increased 3.2% in August on a year-on-year basis, pointing to underlying strength in domestic demand.
Excluding automobiles, gasoline, building materials and food services, retail sales fell 0.2% last month after an unrevised 0.6% increase in July.
