Positive Real Retail Sales In August, But YoY Flatness Continues

Retail sales, probably my favorite monthly economic data point, increased by 0.3% in August. Since consumer prices rose 0.1%, real retail sales rose 0.2%:

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That’s certainly good news. Now here’s the bad news: July’s retail sales were revised downward by -0.4%, so real retail sales, reported last month as +0.1%, are now shown down by a little less than -0.4%. 

Thus as shown above real retail sales are still -1.1% below their April peak.

Ex-autos, retail sales were down -0.3%, and unchanged ex-autos and ex-gas, reversing July’s initially reported gains - which in the case of autos were revised down sharply to -0.4%.

As I note almost every month, real retail sales (/2) are a good short leading indicator for employment. Here’s the long-term view from 1993-2019:

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While real retail sales were down YoY for several months, this month they are up 0.8% YoY, the second positive yearly comparison in a row. Here is the updated comparison with payrolls since June 2021:

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Retail sales continue to forecast a deceleration in monthly payroll gains. Here’s the monthly % change in payrolls for the past year:

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Last autumn’s Booming payroll gains are a thing of the past. Payrolls gains averaging 0.2% (about 300,000) or less are what we should expect for the rest of this year. 

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