US retail sales rebound sharply in August

U.S. retail sales rebounded more than expected in August as households stepped up purchases of motor vehicles and ‌stocked up for the new school year, reinforcing the economy's resilience ‌even as consumers grow more anxious about high inflation.

Retail sales jumped 1.2% last month after a ​revised 0.5% drop in July, which was the first decline in nine months, the Commerce Department's Census Bureau said on Wednesday. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, rebounding ‌0.8% after a previously reported ⁠0.6% drop in July. Estimates ranged from as low as a 0.2% gain to as high as a 1.1% increase.

Last ⁠month's increase also partially reflected higher gasoline prices, which lifted receipts at service stations.

Households have continued to spend despite stubbornly high inflation because of the oil price ​shock and ​supply chain strains from the U.S.-led war ​with Iran. Consumers have, however, ‌become more selective and are seeking lower-priced goods. Consumer sentiment deteriorated this month.

Spending is being supported by steady wage growth and recent stock market gains. Households are also saving less and tapping into their nest eggs. The strength in retail sales, together with elevated price pressures and a labor market that is ‌regaining its poise after wobbling through much ​of summer, further strengthens financial market expectations that ​the Federal Reserve will raise ​interest rates later on Wednesday.

Retail sales excluding automobiles, gasoline, building ‌materials and food services surged 1.4% ​last month after an ​unrevised 0.4% decline in July. Economists had forecast these so-called core retail sales, which correspond most closely with the consumer spending component of ​gross domestic product, rising ‌0.4%.

Economic growth estimates for the third quarter currently exceed a 2.0% annualized ​rate. The economy grew at a 1.5% pace last quarter.