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WASHINGTON (Reuters) – US consumers posted their smallest gain in six months in August as consumers reduced their purchases of vehicles and clothing, but July's upward revisions
Other data released on Friday revealed the sharpest drop in import prices in over a year and a half in August, due to lower fuel costs and various other products. The weak import price data followed low inflation in August.
The signs of cooling consumer spending and inflation have not changed the view that the Federal Reserve will raise interest rates at the end of the month. The US central bank has increased its borrowing costs twice this year.
The Commerce Department said retail sales rose 0.1% last month, the smallest gain since February. Data for July were revised upwards to show that sales increased 0.7% instead of the previously reported 0.5% gain.
The modest increase in retail sales suggests that high gasoline prices could lead to lower spending in other categories. Economists polled by Reuters had forecast that retail sales would rise 0.4% in August.
Retail sales in August were up 6.6% from a year earlier.
Excluding automobiles, gasoline, building materials and food services, retail sales advanced 0.1% last month, after a 0.8% surge in July, revised upward. These so-called basic retail sales most closely correspond to the consumption expenditure component of the gross domestic product.
Basic retail sales are already up 0.5% in July. Despite the slowdown in basic retail sales in August, consumer spending continues to be supported by a tightening labor market, which is leading to a steady rise in wages.
Annual wage growth grew at its fastest pace in more than nine years in August, and there was a record 6.9 million job vacancies in July. Expenditures are also supported by tax cuts and greater savings.
The dollar fell sharply against a basket of currencies on the data, while US Treasury yields hit record highs in the session.
Low auto sales
The economy is expected to experience strong growth in the third quarter and this year, but a growing trade war between the United States and China casts a shadow over the long-term outlook.
President Donald Trump last week threatened tariffs on $ 267 billion worth of Chinese goods in addition to a $ 200 billion list pending his decision. Washington has already imposed tariffs of $ 50 billion on Chinese imports, provoking retaliation from Beijing.
The economy grew at an annualized rate of 4.2% between April and June, the highest rate in nearly four years and nearly double the 2.2% pace set in the first quarter. Growth estimates for the third quarter are 3.0%.
Auto sales declined 0.8% in August after falling 0.1% in July. Gas station revenues jumped 1.7%, likely reflecting gasoline prices, which rose about 32 cents a gallon this year, according to data from the US Energy Information Administration.
Clothing store sales declined 1.7%, the largest decline since February 2017, after increasing 2.2% in July. Furniture store receipts declined 0.3% and sales at building supply stores remained unchanged last month.
But online and mail retail sales have increased and Americans have spent a little more in restaurants and bars. Spending on recreation, musical instruments and bookstores increased after several months of decline.
In another report released on Friday, the Ministry of Labor said import prices fell 0.6 percent in August, the biggest drop since January 2016, after falling by 0.1 percent. cent in July.
The drop in import prices probably reflects a strong dollar, which has gained more than 6% this year against the currencies of the major trading partners of the United States.
In the 12 months to August, import prices rose 3.7%, after dropping 4.9% in July.
Prices for goods imported from China fell 0.1% in August for a second consecutive month. Chinese import prices rose 0.2% in the 12-month period ending in August.
(Report by Lucia Mutikani, edited by Andrea Ricci)
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