Shoppers Spent Less on Apparel and Footwear in August

Consumer spending on clothing and footwear slowed in August, rising 0.75 percent to $408.65 million, from $405.65 million in July, which saw an increase of 1.5 percent over June spending, the U.S. Bureau of Economic Analysis reported Thursday.

This follows a similar pattern found in the U.S. Census Bureau’s monthly retail sales report where sales at clothing and clothing accessories stores were down 1.7 percent in August, from July, even as they increased 6.2 percent year over year. Overall August retail sales — excluding automobiles, gasoline stations and restaurants — increased 0.1 percent over July (seasonally adjusted) and 5 percent year over year, according to the National Retail Federation.

“Clothing and footwear were among the categories with the largest increases in real spending, but this was entirely price-driven,” said James Bohnaker, associate director at IHS Markit. “A large drop in the price index for clothing resulted in a nominal spending decline in August.”

BEA’s monthly Personal Income and Outlays report showed personal income increased 0.3 percent, or $60.3 billion, while disposable personal income (DPI), a key barometer for retail spending, also rose 0.3 percent, or $51.4 billion. Personal consumption expenditures (PCE) increased $46.4 billion, also posting a 0.3 percent gain.

Real DPI, adjusted for inflation, increased 0.2 percent in August, and real PCE rose 0.2 percent. The PCE price index increased 0.1 percent, while the core index, which excluded the volatile food and energy sectors, was up less than 0.1 percent.

According to BEA, the increase in personal income primarily reflected increases in wages and salaries, government social benefits to persons, and non-farm proprietors’ income. The agency noted the $28.7 billion increase in real PCE in August reflected an increase of $15.3 billion in spending for goods and a $14.3 billion increase in spending for services.

Personal outlays increased $47.1 billion in August. Personal saving was $1.03 trillion in August, and the personal saving rate — as a percentage of disposable personal income — was 6.6 percent.

“Improving household finances, fueled by solid wage gains and lower personal tax rates, will help bolster consumer spending for the next several quarters,” Bohnaker said. “Tariff-induced inflation may become a bigger concern for consumers down the road.”

Editor’s Note: This story was reported by FN’s sister magazine Sourcing Journal. For more, visit SourcingJournal.com.

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