Economy Sluggish Despite Modest Gains : Reports: Consumer spending is up slightly. But rise in unemployment claims tempers results.
WASHINGTON — Americans went on a car-buying spree last month, helping to push retail sales to their third increase in four months.
But analysts said Thursday’s report--combined with a sharp increase in weekly unemployment claims--does not point to economic strength.
The Commerce Department said retail sales rose in August by 0.6% to a seasonally adjusted $197.3 billion after a revised 0.4% fall in July.
But the spending was concentrated largely in auto purchasing, as dealers offered discounts to trim inventories. Car sales jumped 2.4% in August after falling 1.5% in July.
Excluding autos, retail sales were unchanged in August after a 0.3% gain in July. Analysts said home computers and software were the only other areas in which sales were solid.
“It’s certainly not a sign of strength,†said economist Charles Renfro of Alphametrics, a forecasting service in Bala Cynwyd, Pa. “The economy is moving ahead with deliberation. It’s nothing really to write home about.â€
What’s more, the Labor Department said the number of American workers filing first-time claims for jobless benefits shot up by a surprising 21,000 last week to the highest level in nearly two months.
“The two reports should reduce the fear that growth is about to accelerate excessively,†said Bruce Steinberg of Merrill Lynch & Co. “Modest gains in consumer spending will remain a brake on the current U.S. expansion.â€
The Commerce Department said sales fell more sharply in July than previously estimated--down 0.4% instead of 0.1%.
The August rebound pushed sales to a seasonally adjusted $197.3 billion, up from $196 billion the month before.
Durable goods--including appliances, autos and other items expected to last more than three years--were up 1.7% last month after falling 0.8% in July.
Sales of home furnishings--a category that includes computers--rose 1.8% in August after slipping 0.4%. But building materials fell 0.8% after advancing 0.3%.
Durable goods were up 7.4% over a year earlier, while all sales were 5% higher than August, 1994.
Sales of non-durable goods such as food and fuel fell 0.1% for the second consecutive month.
Department stores reported a 0.4% drop in August, canceling an identically sized gain in July. Hot weather helped send apparel sales to their second straight 1.5% decline.
There was no change in grocery store sales after a 0.6% increase in July. Gasoline sales fell 1.2% after a 2.1% drop. Sales at restaurants and bars slipped 0.5% after a 0.7% advance.
Meanwhile, in surveys released Thursday, manufacturers predicted improved economic growth through November and construction executives said they expect slowing in the same period.
“Most manufacturers expect new orders for the coming three months to be exceptional and plan for above-average production levels,†said Joseph W. Duncan, chief economist for Dun & Bradstreet, which released the surveys.
Stepped-up production could cause problems, however.
“If actual demand fails to fulfill production expectations, manufacturers could face a situation of rising inventories and stagnant prices,†Duncan said.
The monthly survey of 200 construction executives reported pessimism about conditions through November. For the second straight month, the survey reported a deterioration in employment and prices.
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Retail Sales
Seasonally adjusted, in billions of dollars:
August 1995: $197.3
Source: Commerce Department
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