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US August Retail Sales Fell 0.2%, Limited Market Reaction

US retail sales declined 0.2% for August after a revised 0.3% gain for July which was originally reported as a 0.6% drop. The release was weaker than consensus forecasts of a 0.1% gain and annual growth declined to 3.2% from 3.5%.

Underlying sales rose 0.2% on the month after a 0.4% gain previously which was also below consensus forecasts, although annual growth strengthened slightly to 3.6% from 3.4%.

There was a monthly decline of 0.2% in the control group after a 0.6% gain the previous month.

Motor vehicle sales fell 1.6% on the month which was a better performance than expected while gasoline sales rose 2.5% due to the impact of higher prices.

Clothing sales declined 1.0% on the month and there was also a decline in building material sales.

There was a 0.3% increase in food and drinking places which should sustain confidence in discretionary spending.

There will be a significant short-term distortion to retail spending due to disruption from hurricanes Harvey and Irma and there was an impact in the August data, although there could be positive and negative influences on the data.

Survey evidence suggests solid confidence among consumers which should underpin spending over the next few months.

Given uncertainties surrounding underlying trends, the overall market impact was limited with the data tending to be discounted.

USD/JPY dipped to the 111.00 area from 111.10 while EUR/USD extended gains to the 1.1980 area. Treasuries were little changed with losses of 3 ticks in the 10-year contract as yields remained below 2.20%.