Retail sales in the US rose faster than expected last month in a sign that consumer demand remained strong despite the imposition of tariffs on goods imports by President Trump.

Transactions jumped by 0.6 per cent in the month to August, exceeding analysts’ forecasts for a 0.2 per cent increase and unchanged from an upwardly revised sales growth estimate for July.
On an annual basis, sales rose by 5 per cent, according to data released by the US Commerce Department on Tuesday.

Purchases of clothes and sporting goods jumped by 1 per cent and 0.8 per cent respectively over the month, products that are sensitive to Trump’s import levies. Car sales also rose by 0.4 per cent.

Part of the rise in retail sales over the past month was due to the Commerce Department using the value of transactions rather than the volume of transactions to calculate monthly sales growth.

Pantheon Macroeconomics, a research outfit, calculated that half of the 1 per cent increase in clothing sales “reflected tariff-related price rises”.

There is concern that US consumer spending will eventually ease off if goods prices rise sharply owing to Trump’s tariffs. Figures last week showed that US inflation climbed to 2.9 per cent in August, the highest reading since January.

Samuel Tombs, chief US economist at Pantheon Macroeconomics, said: “Retail sales were robust in August, but the outlook for tariff-driven price hikes and a stagnant labour market suggests this momentum is unlikely to be sustained.”

America’s labour market has weakened in recent months, with 22,000 roles filled in August and unemployment up to 4.3 per cent, a four-year high. This month the Bureau of Labor Statistics downwardly revised its first estimate of jobs growth across the year to March by 911,000. A weaker labour market typically drags down consumer spending as it can amplify anxieties about job security and prompt employers to trim down wage settlements.

On Wednesday the Federal Reserve, the US central bank, is anticipated to lower interest rates for the first time this year by a quarter point to a range of 4 per cent to 4.25 per cent.