US retail sales decline in August

US shoppers seem to be cutting back on their spending

US retail sales fell unexpectedly in August, the second monthly decline in succession, increasing concerns about the state of the domestic economy.

Sales declined 0.3% last month said the Commerce Department, which also revised July's fall to 0.5% from the 0.1% it had first estimated.

August's weak figure was a surprise for analysts who had predicted a 0.3% rise.

Retail analyst Chris Rupkey said the latest figure "sounds the death knell for the consumer".

'Digging a whole'

"It looks like consumer spending is retrenching, not only retrenching but digging a new hole," said Chris Rupkey, analyst, Bank of Japan-Mitsubishi.

I would be very surprised to see consumer spending in positive territory in the third quarter Chris Rupkey, analyst, Bank of Japan-Mitsubishi

While the most recent US economic growth data showed that the economy expanded at an annual rate of 3.3% in the three months from April to June, much of that rise was contributed to by American exporters.

By contrast, domestic consumer spending is being hit by a number of factors, such as higher unemployment, rising energy and food bills and a sharp decline in the housing market.

Sales of cars and other vehicles rose 1.9% in August - the first increase since January - following a 4.3% drop in July.

However, August's sales were still 13.5% lower compared with the same month last year.

Excluding motor sales, core retail sales fell 0.7% in August after rising 0.3% in July.

Mr Rupkey said he expected consumer spending to continue to fall.

"I would be very surprised to see consumer spending in positive territory in the third quarter," he said.