US retail sales up 0.2% in Aug vs 0.3% increase expected

Retail sales rose in August

U.S. consumer spending appeared to grow at a fairly healthy pace in August, pointing to solid domestic demand that could persuade a cautious Federal Reserve to hike interest rates on Thursday.

The Commerce Department said on Tuesday retail sales excluding automobiles, gasoline, building materials and food services increased 0.4 percent after an upwardly revised 0.6 percent increase in July.

These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. Core retail sales were previously reported to have increased 0.3 percent in July.

Shoppers at a Walmart store
Some shoppers actually like Christmas creep

August's increase was in line with economists' expectations. The retail sales report was the latest indication of sturdy economic momentum and suggested the recent stock market sell-off had little impact on consumer spending.

Signs of sustained strength in the economy could encourage the Fed to raise its benchmark overnight interest rate from near zero. The U.S. central bank's policy-setting committee meets on Wednesday and Thursday against the backdrop of a tightening labor market, low inflation and slowing global growth.

Overall retail sales rose 0.2 percent last month as strong gains in auto sales were offset by a 1.8 percent drop in the value of sales at service stations due to a decline in gasoline prices.

Retail sales increased by an upwardly revised 0.7 percent in July. Economists polled by Reuters had forecast retail sales increasing 0.3 percent in August after a previously reported 0.6 percent rise in July.

Receipts at auto dealerships rose 0.7 percent after rising 1.3 percent in July. Sales at clothing stores rose 0.4 percent. Receipts at building materials and garden equipment stores fell 1.8 percent and sales at furniture stores declined 0.9 percent.

There were increases in sales at online retailers, restaurants and bars, sporting goods and hobby stores, and electronics and appliance outlets.