Retail Sales Still Healthy, Industrial Production Slows from Katrina, Gasoline Supplies Rise

- Advance Retail Sales for August fell 2.1% versus estimates of a 1.4% decline and a 1.8% gain in July.
- Retail Sales Less Autos for August rose 1.0% versus estimates of a .5% increase and a .5% gain in July.
- Industrial Production for August rose .1% versus estimates of a .3% gain and a .1% increase in July.
- Capacity Utilization for August was 79.8% versus estimates of 79.8% and 79.8% in July.
- The Energy Information Agency (EIA) reported that crude inventories fell 6.56 million barrels vs. estimates of a 2-million-barrel decline. Gasoline inventories rose 1.89 million barrels vs. estimates of a 2.2 million barrel decline. Distillate inventories fell 1.11 million barrels vs. estimates of a 150,000 barrel rise.

BOTTOM LINE: US retail sales fell in August by the most since November 2001 as auto purchases slumped after a buoyant July, Bloomberg reported. Excluding autos and purchases at service stations, sales rose .5%, right at the long-term average. This is remarkable considering the recent headwinds. Auto purchases fell as employee discounts were phased out. Sales accelerated for building and heath care products.

US industrial production rose .1% in August, less than expected, as Hurricane Katrina disrupted oil, gas and chemicals production in the US Gulf Coast region, Bloomberg said. Year-over-year gains in industrial production averaged 3.3% in the first seven months of this year versus a 4.1% gain last year. Historically, oil prices are highly correlated to global industrial production.

Oil is rising to $64.27 on the EIA report, notwithstanding the rise in gas supplies.