Sales at US retailers rose a smaller-than-expected 0.3% in August and recorded the biggest decline in almost a year when car sales were stripped out, official figures showed today, suggesting American consumers are turning more cautious.
Analysts say that coupled with last weeks report that payroll jobs are now falling, these retail sales data make more certain that the Federal Reserve will cut the target federal funds rate by at least 25 basis points to 5% next week.
Excluding volatile car sales, the Commerce Department report showed a 0.4% decline - the sharpest drop in a year.
Analysts had been expecting a 0.5% rise in the headline figure and an increase of 0.2% excluding cars.
Core retail sales - which exclude cars and petrol - were unchanged in August after a 0.8% gain in July.
Purchases of motor vehicles and parts, which make up around 20% of all sales, rose 2.8%, the biggest rise since July of last year.
In a separate report today the Commerce Department said the second quarter current account deficit was $190.8 billion, down from $197.1 billion in the first quarter.
In addition to trade in goods and services, the current account deficit includes income received from US investments abroad less payments to foreigners on their investments in the United States.
In the second quarter, the United States had a $26.5 surplus on trade in services and a $9.4 billion surplus on income payments.
This was hardly enough to offset the massive $204.2 billion deficit on trade in goods, and net unilateral transfers to foreigners equal to $22.5 billion.
The huge deficit on trade in goods is mostly caused by the trade deficit with China and petrol and car products account for about most of the deficit on trade in goods and services.
And a report from the Federal Reserve today showed that US industrial production rose by a smaller-than-expected 0.2% in August as both manufacturing and mining output fell, but utility output surged.
Analysts had expected a 0.3% increase in output from the nation's factories, mines and utilities in August.
July's output figure, however, was revised upward to an increase of 0.5% from an originally reported 0.3%.
