US retail sales: A weak report - Wells Fargo

According to analysts from Wells Fargo, overall the August retail sales was weak. They point out that the strongest sectors were clothing, food and drink.

Key Quotes:

“U.S. consumers seem to have taken a break from shopping in August as the retail sales number came down a more than expected 0.3 percent after an upwardly revised 0.1 percent increase in July, a pattern of retail sales that has been normal since the recovery from the Great Recession. Weakness was clear across the retail sales and food services spectrum with very few exceptions. Excluding motor vehicle and auto parts sales, the retail sales index was down 0.1 percent, which means that weakness in auto sales was one of the major culprits of the larger-than-expected decline in the August sales report.”

“A second exception to the weak performance in the August retail sales report was clothing and clothing accessories stores’ sales, which improved a strong 0.7 percent after declining 0.6 percent in July. Still, this sector’s sales are down 0.3 percent versus a year earlier."

“Other than the clothing sector of retail sales, the strongest sectors of the retail sales and food services index were those related to food and drink. On the retail sales side, food and beverage store sales were up 0.3 percent, while grocery store sales (a sub-segment) was up 0.4 percent. Meanwhile, on the service side of the report, food services and drinking places sales were up a strong 0.9 percent after a flat month in July. Thus, do not count consumers out just yet. Although the goods side of consumer demand was weak, the service side is still strong. They were probably just enjoying the last months of the summer.”