US retail sales smash expectations in August

US retail sales accelerated much faster than expected in August, bolstered by recovering gas station sales and strong clothing sales.

Retail and food services sales rose for a fifth consecutive month in August, climbing 0.6% in August from July, according to US Census Bureau data released Sept. 14. Economists expected subdued growth in August, with the consensus at 0.2%, according to data compiled by Econoday. Retail sales have blown past expectations each month since May amid resilient consumer spending.

Three retailers filed for bankruptcy protection from mid-August through Sept. 14, while the median default risk fell, according to S&P Global Market Intelligence data.

Retail sales

The advance estimate for US retail and food services sales totaled $697.6 billion in August, up from a revised $693.7 billion in July, according to Census Bureau data. August sales rose by 2.5% on an annual basis.

Gasoline stations registered the largest monthly increase in sales among major retail categories notching 5.2% growth. Sales at clothing and clothing accessories stores grew by 0.9% on a monthly basis.

On an annual basis, food services and drinking places saw the greatest increase in sales, posting increases of 8.5%, followed by health and personal care stores with growth of 7.8%.

– Set email alerts for future Data Dispatch articles. – For more bankruptcy analysis, check out the monthly bankruptcy series.

Furniture and home furnishing stores and building material and garden equipment dealers were among retailers with the largest year-over-year sales declines, as they fell 7.8% and 4.9%, respectively.

Bankruptcies

Bedding and home products manufacturer Pegasus Home Fashions Inc., furniture company Noble House Home Furnishings, LLC and women's apparel retailer Triad Catalog Co., LLC all filed for bankruptcy during the mid-August to mid-September period. Noble House Home Furnishings announced it had entered into a definitive agreement with GigaCloud Technology Inc. on Sept. 12 with plans to sell its assets for $85 million.

As of Sept. 14, 22 retailers have filed for bankruptcy in 2023, more than the yearly totals for 2021 and 2022.

Default risk

Median default risk across all retail categories decreased to 2.2% as of Sept. 14, according to Market Intelligence's Market Signal Probability of Default model. Although default risk increased across most retail categories, declines for some of the larger categories pulled the overall default risk lower.

Apparel, accessories and luxury goods retailers' default risk dropped to 1.8% in mid-September from 2.1% in mid-August, while other specialty retail fell to 3.6% from 4.2%.

Drug retail saw a 1.6% increase in default risk to 11.8%, but only four companies are included in the model.

Scores produced by the model represent the odds of default within a year and are based primarily on the volatility of share prices for public companies in the sector, accounting for country- and industry-related risks.