Agencies
US consumer spending weakened in August with retail sales slowing to a near-flat level while interest rates stayed high, according to government data released Tuesday.
Overall retail sales were up 0.1 percent from July to August at $710.8 billion, though this beat analysts’ expectations, data from the Department of Commerce showed.
Meanwhile, US industrial production surged in August as motor vehicle manufacturing bounced back after plummeting in July, the Federal Reserve said Tuesday, shortly before kicking off a two-day meeting on interest rates.
Analysts had expected a 0.2 percent decline, according to Briefing.com. The latest figures were bogged down by tepid sales at auto dealers and gas stations, the report said. Sales at motor vehicle and parts dealers slipped 0.1 percent from a month ago while those at gas stations dropped 1.2 percent.
Excluding autos and gas stations, retail sales was up 0.2 percent.
"The consumer is getting, in my mind, less and less resilient,” said Dan North, senior economist at Allianz Trade North America. One reason is that real disposable income, referring to income after inflation and taxes, has declined — as have consumers’ excess savings — North told AFP. But he does not expect the slowe
r sales figure to have a major impact on the Federal Reserve’s calculus this week when the central bank mulls the size of expected interest rate cuts.
"It’s very clear that rate cuts are coming, the market is basically expecting (a cut of) 25 basis points,” North said. But he added that the data will be among indicators the Fed will consider as it proceeds with a gradual approach to rate reductions.
Total industrial output exceeded expectations to rise by 0.8 percent last month from a revised 0.9 decline in July, the US central bank said in a statement, pinning much of the rise on "a recovery in the index of motor vehicles and parts.”
The index "jumped nearly 10 percent in August after dropping roughly 9 percent in July,” it added. The July data was affected by the larger-than-expected impact of Hurricane Beryl.
The sharp monthly rise in industrial production in August was well above market expectations of a 0.1 percent rise, according to Briefing.com.
The news is likely to soothe concerns about the sector, shortly before the Fed kicks off its two-day interest rate meeting later Tuesday which is widely expected to end with a rate cut.