U.S. retail sales, factory output slump; third-quarter growth forecast cut
By Lucia Mutikani
WASHINGTON (Reuters) - U.S. retail sales fell more than expected in August amid weak purchases of automobiles and a range of other goods, pointing to cooling domestic demand that further diminishes expectations of a Federal Reserve interest rate increase next week.
The economic growth outlook also took a hit from other data on Thursday showing a drop in manufacturing output last month. The reports, which extended August's run of weak data, prompted economists to cut their growth estimates for the third quarter.
"With households not buying, manufacturers stopped producing. If the Fed is data dependent, then the next time a hike would likely come is December," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.
The Commerce Department said retail sales declined 0.3 percent after edging up 0.1 percent in July. Sales were up 1.9 percent from a year ago. Excluding automobiles, gasoline, building materials and food services, retail sales slipped 0.1 percent last month after a similar drop in July.
These so-called core retail sales correspond most closely
with the consumer spending component of gross domestic product.
Economists had forecast overall retail sales slipping 0.1 percent and core sales climbing 0.3 percent last month.
Sales were almost broadly weak, rising in only four categories, including clothing stores and restaurants and bars. Receipts at auto dealerships fell 0.9 percent and online sales, whose share has grown in recent years, dropped 0.3 percent. Continued...