U.S. Retail Sales Backpedal

Total retail sales and spending at restaurants declined 0.2% (+3.5% y/y) during August. The July estimate was revised lower to 0.3% from 0.6% and June's figure was reduced to -0.1% from 0.3%. A 0.1% increase had been expected in the Action Economics Forecast Survey. Leading last month's decline was a 1.6% fall in motor vehicle & parts sales (+1.9% y/y) compared to a 3.7% fall (-6.3% y/y) in unit motor vehicle sales. Retail sales excluding autos improved 0.2% following a 0.4% rise, revised from 0.5%. A 0.3% rise had been expected. June's change was lowered to -0.2% from +0.1%. At this time, the Commerce Department indicated that Hurricane Harvey had an indeterminate effect on overall retail sales last month.

Spending on nonauto discretionary items generally weakened last month. Sales at nonstore retailers declined 1.1% (+8.0% y/y) following a 1.8% rise. Purchases at apparel stores fell 1.0% (+1.5% y/y) after a 0.5% gain. Sales at electronics & appliance stores were off 0.7% (-3.3% y/y), the fourth consecutive month of decline. Building materials and garden equipment stores eased 0.5% (+8.2% y/y) following a 0.9% rise. To the upside were gasoline service station sales which increased 2.5% (6.6% y/y) with higher prices. That followed six straight months of sales decline. Sales at furniture & home furnishings stores rose by 0.4% (5.9% y/y) following a 0.5% shortfall. General merchandise store sales gained 0.2% (3.1% y/y) following a 0.3% rise. Sporting goods & hobby shop store sales inched 0.1% higher (-1.7% y/y) following three straight months of decline. 

In the nondiscretionary sector, health & personal care store sales ticked 0.1% higher (0.3% y/y) after a 0.2% rise. Food & beverage store sales rose 0.3% (2.8% y/y) following a 0.2% gain.

Restaurant sales improved 0.3% (3.0% y/y) following a 0.1% shortfall.

The retail sales data can be found in Haver's USECON database. The Action Economics forecast expectations are included in the AS1REPNA database.

The Empire State Manufacturing Index of General Business Conditions for September eased to 24.4 following its 15.4 point jump to 25.2 during August. The latest level was nearly the highest since September 2014 and continued to indicate expansion in factory sector activity. It exceeded expectations for 18.0 in the Action Economics Forecast Survey. These data, reported by the Federal Reserve Bank of New York, reflect business conditions in New York, northern New Jersey and southern Connecticut.

Based on these figures, Haver Analytics calculates a seasonally adjusted index that is comparable to the ISM series. The adjusted figure rose to 57.3, the highest level since May 2011. During the last ten years, the index posted a 63% correlation with the change in real GDP.

Most component series improved, including higher figures for shipments, new orders, inventories and delivery times. The workweek figure fell.

The employment index rose to its highest level since May. During the last ten years, there has been a 69% correlation between the employment index and the m/m change in factory sector payrolls. Twenty-three percent of respondents reported a higher payroll level while twelve percent reported a decline. The employee workweek reading reversed half of its August gain, but remained up sharply y/y.

The prices paid series increased to the highest level since March, but remained below its February high. Thirty-seven percent of respondents reported paying higher prices, while one percent reported them lower. The prices received index jumped to the highest level since February.

Expectations of business conditions six months ahead deteriorated m//m but remained up y/y. Movement in component series was mixed.

The Empire State figures are diffusion indexes, which are calculated by subtracting the percent of respondents reporting declines from those reporting gains. The data are available in Haver's SURVEYS database. The ISM-adjusted headline index dates back to 2001. The Action Economics Forecasts can be found in Haver's AS1REPNA database.