U.S. retail sales seem to have rebounded in August

U.S. retail sales are expected to have rebounded in August after giving a disappointing performance in July. The subdued report in July was mainly due to the weakness in the control group that remained flat after rising 0.5 percent in June. This was the weakest print for the control group since October 2015. Significantly, out of the 10 categories in the control group, weakness in three specific categories accounted for the major share, around 75 percent, of the deceleration in the control group.

In particular, spending at grocery stores fell 0.6 percent; the biggest monthly fall since May 2011. The decline in this category negatively contributed 0.14 percentage points from the monthly changed in the control group. In any case, outlays at grocery stores recovered markedly in the following month and is expected to bounce-back strongly in this series in August, said Societe Generale in a research note.

Similarly, spending at health/personal stores decelerated to only 0.1 percent in July, the weakest since January. This comes after a strong rate of expenditures that saw this series average a monthly increase of 0.9 percent. A modest recovery is anticipated in August, noted Societe Generale.

In all, the control group is expected to have improved 0.3 percent in August. In spite of the likelihood that control group increase moderately in August, the headline reading might have stayed flat in August. Unit auto sales fell 4.8 percent last month, which is likely to have translated into a 2 percent decline in auto dealers’ receipt in the month.

In the meantime, gasoline prices were little changed in August on a seasonally adjusted basis. Therefore, gasoline category is expected to have risen 0.1 percent. Sales excluding gasoline and autos are likely to have rebounded by 0.3 percent, added Societe Generale.