Americans Keep Wallets Open…Retail Sales Rise for Third Consecutive Month

August 0.6% increase…three times the expectation

U.S. retail sales for last month exceeded market expectations. Despite concerns that tariffs and other uncertainties would weaken consumer sentiment, retail sales rose for the third consecutive month.

According to the U.S. Department of Commerce on the 16th, August U.S. retail sales increased 0.6% from the previous month. It surpassed the Bloomberg-compiled expert forecast (0.2%). Compared with the same period last year, it rose 5.0%.

Retail sales are a key indicator of the U.S. economy and consumer sentiment. The U.S. central bank (Fed) considers the retail sales index along with price indicators when deciding monetary policy.

Despite concerns over rising prices and a worsening labor market, consumption is assessed to be relatively firm. However, in the market the prevailing view is that the Fed will cut the benchmark interest rate by 0.25% point at the Federal Open Market Committee (FOMC) meeting to be held on the 16th–17th. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market sees a 95.8% probability that the benchmark rate will be cut by 0.25% point at this September FOMC meeting. Bloomberg News reported, "The Fed is still evaluating the impact of tariffs on prices but is expected to lower the benchmark rate to prevent further deterioration of the labor market."

Han Myeong-hyeon, reporter wise@hankyung.com