U.S. Retail Sales (August 2025)

Retail sales continued to rise in August   

• Building on their gain in July, retail and food services sales continued to grow in August, advancing by 0.6% month-on-month (m/m) and matching July's gain. Today's result was stronger than consesus expectations for a 0.2% gain.  
• Sales of autos & parts as well as sales at the gasoline stations both rose by 0.5% on the month. Sales at the building materials and garden equipment & supplies stores were little changed (+0.1% m/m).   
• Sales in the "control group", which excludes the three volatile components mentioned above (i.e., autos, gasoline and building supplies) were up by a healthy 0.7%. Online sales led the gains, with sales at non-store retailers rising by 2% on the month. Clothing stores had another good month, with sales rising by 1.0% - a sixth consecutive monthly increase. Sales of sporting goods & hobby items were also higher (+0.8%). Miscellaneous (-1.1%), general merchandise stores (-0.1%), health & personal care stores (-0.1%) and furniture (-0.3%) retailers were the categories where sales were lower.
• Sales at bars and restaurants – the only service category in the report – rebounded by 0.7%, following a flat reading in the prior month.

Key Implications

• There was not much to complain about in this report. Retail sales continued to rise at a decent clip for the third consecutive month, with above-consensus print for both core and headline numbers. Decent retail sales over the last few of months suggest that consumer spending growth is likely to come in around 2% (annualized) in the third quarter. This is still modest growth, particularly when compared with the 3.5% pace seen in the second half of last year, but better than our initial tracking. 
• Consumers may have breathed a sigh of relief that their worst inflation fears have not materialized, however, the impact of tariffs continues to show up in core goods prices. Up until recently, businesses have tried to absorb higher costs and shield consumers, but inflation data over the last few months have shown that some of the costs are now being passed on. We expect greater pass through of tariff-related price increases over the coming months. With the labor market downshifting and cost pressures heating up, consumer spending momentum is likely to remain modest through year-end.

Disclaimer

This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.