WASHINGTON (Reuters) – U.S. retail sales unexpectedly fell in August and industrial output recorded its biggest drop since 2009 as Hurricane Harvey disrupted activity, suggesting the storm could dent economic growth in the third quarter.
Harvey, which lashed Texas in the last week of August, also has impacted the labor market. Hurricane Irma, which struck Florida last weekend, also is likely to hurt the economy, though analysts expect a rebound in the fourth quarter.
“The early returns from Harvey are trickling in and the news is not good,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “Economists are likely marking down third-quarter growth and marking up the fourth quarter.”
The Commerce Department said retail sales dropped 0.2 percent last month, the biggest decline in six months as motor vehicle sales tumbled 1.6 percent. Sales of building materials, electronics and appliances as well as clothing also fell.
While noting that it could not isolate the impact of Harvey on retail sales, the department said it received indications from companies that the hurricane had “both positive and negative effects on their sales data while others indicated they were not impacted at all.”
Though Harvey likely depressed retail sales last month, data for July and June were revised down, suggesting a moderation in consumer spending after brisk growth in the second quarter.