Reuters retail reporting faux pas
Reuters reported that US retail sales made their smallest gain in six months in August, up 0.1% after a 0.8% jump in July. Apparently, this signals cooling consumer spending. However, we keep repeating that analysing retail spending growth based on the previous month makes no sense at all and is sensationalist. The real picture can only be found in corresponding year-on-year data. In this case, US retail sales in August actually advanced 6.6% from a year ago - a dramatically different picture, which highlights that consumer spending remains supported by a tightening labor market, which is steadily pushing up wages. Annual wage growth increased at its fastest pace in more than nine years in August and there were a record 6.9 million job openings in July. Spending in the US is also being underpinned by tax cuts and higher savings as well as high consumer sentiment. Makes you wonder how the negative media-driven retail sentiment for August even got published?