Rising COVID cases stemming from the virulent delta variant have driven governments and businesses to reimpose social distancing measures and delay return-to-office policies, putting a damper on some economic activity. But consumers continue to power through the end of the summer.
Retail and food services sales unexpectedly grew by 0.7% in August, following a downwardly revised 1.8% fall in July. The month-over-month changes to the headline figure this year have alternated between positive and negative, but at 15.1% year-over-year growth, and at an 9.3% annualized growth since August 2019, it’s evident that retail and food services sales remain elevated, even as COVID cases rise sharply in many parts of the nation.
Clothing sales remained high in August, the prime month for back-to-school shopping. Children and teens outgrew their clothing over the pandemic, and many workers being called back to the office are updating their wardrobes — although athleisure is still experiencing strong gains in sales. Clothing retailers overall are seeing sales at an annualized 7.5% higher than in August 2019.
However, capacity limits and closures deeply affected sales at restaurants and bars, which were flat in August after five consecutive months of growth. The year-over-year increase of 31.9% serves as a reminder of the depth of last year’s pullback when many restrictions were in place. Food services and drinking establishment sales are up an annualized 5.1% since August 2019. Despite these gains, the sector largely underperformed analyst expectations during the summer, as pent-up demand for dining out and travel was thwarted by the ongoing pandemic.
In contrast, sales from nonstore retailers grew by 5.3% in August — leading all major sectors, much like they did regularly in pre-pandemic times. Compared to two years ago, nonstore retailer sales have grown by an annualized 18%, also leading all major sectors.
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