MNI DATA ANALYSIS: US August Retail Sales Rise Only 0.1%>

--August Retail Sales Ex. Auto Up 0.3%; Control Group Up 0.1%

--Import Prices Fall 0.6%; Ex-Fuels Down 0.1%; Suggest No Tariff Impact

By Kevin Kastner

     WASHINGTON (MNI) - The value of retail sales rose by only 0.1% in 

August overall and 0.3% excluding motor vehicle sales, below 

expectations for 0.4% and 0.5% gains, respectively, but following upward 

revisions to sales in July, data released by the Commerce Department 

Friday showed. 

     Markets had expected a 0.7% increase for overall retail sales, 

suggesting that they saw gains for both vehicle sales and gasoline 

station sales, only one of which materialized. A sharp drop in clothing 

sales was also a key factor. 

--MOTOR VEHICLE SALES DOWN, GAS UP

     Motor vehicle sales posted a 0.8% decrease, a third straight 

decline, this one the largest since February. Even as vehicle sales have 

been weak, other components have risen to offset it. That was not the 

case in August. 

     Gasoline station sales did rise by 1.7% in August after a 2.2% July 

gain, but outside of both motor vehicles and gasoline, retail sales 

managed only a 0.2% gain. 

     A big reason was a 1.7% decline in sales at clothing stores, the 

largest monthly drop since February 2017. At the same time, building 

material sales were flat and department store sales fell by 1.0%. 

     Food services and drinking places' sales did rise by 0.2% and 

electronics store sales rose by 0.4%, providing some offset to the 

weakness elsewhere. 

     However, retail sales excluding autos, gasoline, and building 

materials  rose by only 0.2% in August. Further, excluding food services 

as well as the other three measures, retail sales were up only 0.1% 

after a 0.8% July gain, an sign that underlying sales could not maintain 

their brisk July pace. 

--3Q CONSUMPTION STAYS STRONG

     Incorporating the upward revision to July sales and roughly 

unrevised sales in June, third quarter retail sales were up 5.3% at an 

annual rate from the second quarter average, suggesting upward momentum 

despite the softer August reading. 

     Sales excluding motor vehicles were up 7.1% at an annual rate from 

the previous quarter, while sales excluding autos, building materials, 

and gas were up 6.6%. Even when food services were also excluded, third 

quarter sales were still up 4.7% at an annual rate from the second 

quarter, pointing to underlying strength outside the volatile 

categories. 

     It remains to be seen how September sales fare in the midst of 

Hurricane Florence and other storms, and how that impacts the third 

quarter average. This data will be released prior to the advance third 

quarter GDP report. 

--IMPORT PRICES DROP

     In other data reported on Friday, import prices fell by 0.6% in 

August, compared with a 0.2% decline expected. Excluding a 0.4% decline 

in fuel prices, import prices were down 0.1% in the month, with declines 

in capital goods and industrial supplies ex. fuels and flat readings for 

autos and consumer goods. The data suggest no import price impact from 

the tariffs. 

     On a year/year basis, import prices were up 3.7%, down sharply from 

4.9% in the previous month, while prices excluding fuels were up only 

0.9%, suggesting that most of the recent import price inflation is 

energy-related. 

     Import prices from Canada were down 1.5% in August, the largest 

decline since January 2016, while prices from China, Mexico, and the EU 

all declined by 0.1% in the month, showing no tariff impacts.     

     Export prices fell 0.1% in August, and were down 0.2% when a 0.2% 

gain in agricultural prices is excluded. The small increase in 

agricultural export prices, which followed sharp declines in the 

previous two months, may be the first signs of impact from retaliatory 

tariffs on farm exports. 

     ** MNI Washington Bureau: 202-371-2121 ** 

[TOPICS: MAUDS$,MT$$$$,M$U$$$,MAUDR$]