Hurricane Harvey hits US retail sales in August

US retail sales were down unexpectedly in August, while industrial output recorded the biggest drop since 2009 in the wake of Hurricane Harvey, suggesting that economic growth could be dented in the third quarter due to the storm.

Harvey, which hit Texas in the last week of August has also impacted the labour market. Hurricane Irma, which hit Florida last weekend, would also dent 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, Reuters reported. ''Economists are likely marking down third-quarter growth and marking up the fourth quarter.''

According to the commerce department retail sales slid 0.2 per cent last month, the biggest decline in six months as motor vehicle sales fell 1.6 per cent. Sales of building materials, electronics and appliances as well as clothing also declined.

The department added that it was not possible to isolate the impact of Harvey on retail sales, but said that 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.''

Gus Faucher, chief economist at The PNC Financial Services Group, said production will likely  be down again in September as some facilities remain closed from the massive flooding in Houston.

Hurricane Irma will also cause some output losses in Florida.

Output in August also registered across-the-board declines, with output across manufacturers down 0.3 per cent while production at utilities plunged 5.5 per cent. Mining output declined 0.8 per cent.

Production of business equipment, consumer goods and construction also declined.

Auto production rose 2.2 per cent in August, partly offsetting a 4.2 per cent drop in the prior month.

Worries about the auto sector continue as production in the sector is down 3.6 per cent over the past year.