The Dow Jones (DJIA) is set to open slightly in the red, despite August’s retail sales showing monthly growth of 0.6%, above the expectation of 0.2%. In addition, July’s reading was revised higher to 0.6% from 0.5%.
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Excluding volatile items, like autos, gas, and building materials, August’s retail sales grew by 0.7%, beating the expectation of 0.4% and rising from 0.5%.
However, analysts warn that a weak labor market and the risk of inflation could cloud the outlook for future retail sales.
Weak Payrolls and Inflation Threaten Growth
In August, nonfarm payrolls totaled 22,000 job additions, below the estimate of 75,000. In addition, the Bureau of Labor Statistics revised nonfarm payrolls lower for the year ended March by a record 911,000 jobs.
“Households still generally have the means to spend, but growing concerns over the labor market suggest that we will likely see a pullback in the pace of spending growth for the remainder of the year,” said Wells Fargo senior economist Sam Bullard.
Meanwhile, inflation still poses a risk to spending, with August’s Consumer Price Index (CPI) notching a year-over-year rise of 2.9%, the highest rate since January.
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