Retail Sales Climb in August, Outpacing Forecasts

Consumer spending shows unexpected strength with 0.6% monthly gain and 5% annual growth, boosting confidence for the retail sector.

Stronger-than-expected August sales highlight steady demand and support for retail leasing and investment opportunities heading into Q4.

U.S. retail sales rose 0.6% in August, triple the 0.2% forecast, with core sales (excluding autos and gas) up 0.7%. Year-over-year growth reached 5%, signaling consumer strength despite a slowing job market and higher inflation.

Spending gains were broad based with nine of 13 categories improving. Notable standouts included e-commerce (+2%), clothing (+1%), and sporting goods (+0.8%), while spending at restaurants and bars, the only service sector category, rose 0.7% after a decline in the prior month. Furniture and general merchandise slipped but stayed positive versus last year. July’s sales were also revised higher.

Economists cite resilient higher-income households, stock market gains, and rising home prices as key supports. With the Federal Reserve meeting this month, this stronger-than-expected report could influence rate cut discussions.​

Key Takeaway ​

Steady consumer spending supports retail leasing demand and may help sustain tenant stability heading into the holiday season, providing positive signals for shopping center owners, retail investors, and brokers planning Q4 strategies. Federal Reserve officials are closely tracking consumer spending, which drives two-thirds of U.S. economic activity, as they decide the path of interest rates. While assessing the impact of tariffs on prices, policymakers are widely expected to cut rates at the end of their two-day meeting Wednesday to help protect the labor market.