August Retail Sales Post a Surprise Gain
Economy Gains Strength Despite Rising COVID-19 Cases
Though COVID-19 cases remain high, the economy is showing signs of strength with retail sales in August posting a surprise gain and weekly initial unemployment claims remaining near pandemic lows this week.
Take retail sales for starters. Sales in August increased 0.7% compared to July, even though economists had expected retail sales to show a 0.8% month-over-month decline. Before the reports, economists had expected retail sales to decline as consumers cut back spending due to the fast-spreading Delta variant of COVID-19. Supply-chain bottlenecks and rising prices were also expected to dent consumer spending, but this trend was not as severe as expected.
Bars and Restaurants See Declines in August
Excluding restaurants and bars, sales during August were strong in many areas as consumers hit malls and online stores during the back-to-school season. Auto sales declined 3.6% in August. Retail sales for August would have increased 1.8% on the month if vehicle sales were not included. Ecommerce also saw a healthy 5.3% uptick in August.
Gains also came in the home furnishing category, which was up 3.7%, and general merchandise, which increased 3.5%. Electronics and appliances did not fare as well with a 3.1% and 2.7% decline, respectively. Overall, year-over-year retail sales are up 15.1%, underscoring consumers’ resiliency.
Initial Unemployment Claims Tick Higher, Hover Near Pandemic Lows
Initial jobless claims for last week, which came in at 332,000, marked a slight uptick from the low of 312,000 the week earlier, but were still near pandemic lows. Some of the layoffs were blamed on Hurricane Ida, which hit Louisiana at the end of August. Meanwhile the four-week moving average for claims declined to 335,750 last week—the lowest level since March 2020 when the pandemic hit US shores.
Initial unemployment claims have been dropping since the middle of July despite rising COVID-19 cases. While the slight uptick in unemployment is partly because of concerns about the pandemic, it is also due to more job openings than this time last year. While cases of COVID-19 continue to rise, consumers and job seekers are taking it in stride. It will be interesting to see if this remains the case as we enter the winter months.
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