August Retail Sales Disappoint, Reflecting Sluggish Recovery
This story has been updated from 8:53 am ET with additional information.
NEW YORK ( TheStreet) -- August retail sales were softer than expected, reflecting a slow recovery illustrated by sluggish sales in a variety of categories apart from those tied to home buying.
U.S. food and retail sales rose 0.2% in August from July to $426.6 billion, according to the latest Commerce Department figures released on Friday, below economists' expectations of a 0.4% rise. Retail sales last month increased 4.7% compared to August 2012, according to government data. Retail sales in July were adjusted upward to 0.4% from 0.2%, according to the data.
Also see: Retail Renaissance In The Home
Also see: Vera Bradley Tanks on Cautious Outlook
Almost none of the categories listed by the Commerce Department had any significant gains month over month. The largest were motor vehicle and parts dealers, up 0.9% from July, as well as furniture and home furnishing stores, also up 0.9%. Electronics and appliance stores saw a 0.8% gain in August, according to the data. On the other hand, clothing and accessories fell 0.8% month over month.
Retail sales excluding autos rose just 0.1% compared to expectations of 0.3% rise, according to Thomson Reuters. Excluding gas, autos and building materials, the number rose 0.2% compared to 0.3% that was expected.
Economists agree that the numbers are likely forecasting weaker spending for the rest of the year as consumers struggle. As a result, the much-anticipated tapering of fed policy could be less aggressive or even delayed.
"The first key economic report since Friday's employment, this morning's retail sales report was disappointing as back-to-school shopping fell short," Sterne Agee Chief Economist Lindsey Piegza says. "Aside from autos, consumers were hesitant to loosen their purse strings, cutting back on non-essential, discretionary purchases. "
"Consumption has been lackluster volleying at a near 2% rate through the first half of the year. With income growth of less than 1% and waning momentum in the jobs market, consumption is likely to falter further. And while the Fed isn't necessarily watching the monthly retail sales data as a catalyst to policy change, a slowdown in spending is indicative of underlying weakness," Piegza says.
Steve Blitz, chief economist for ITG Investment Research, notes that while categories like home furniture and furnishings as well as electronics and appliances did see an uptick last month, the increase is directly related to the home buying seen this year.
"We know that home sales
"We're spinning in place," Blitz says. "In the sense that's there's no acceleration in sight and that's really the key thing. ... It's clear from the data we've gotten since then -- in terms of employment, housing and now retailers -- there is no acceleration. In fact, you could even argue that there's a little bit of deceleration."