Dive Brief:

• August retail sales declined more than expected, the Commerce Department said Thursday, reflecting a slowdown in auto sales and continued low fuel prices.

• Retail sales fell 0.3% since July, the first decline in five months. Economists polled by Bloomberg expected a median 0.1% decrease, although their expectations ranged from a decline of 0.8% decrease to a 0.2% increase. Core sales, which exclude auto sales, fuel station sales and building materials sales, fell 0.1%. last month. (Core sales are used to calculate GDP.) In addition, July’s sales were revised to a 0.1% gain from a previously report of flat sales.

• “This is not a good report, for the most part,” Chris Christopher, director of consumer economics at IHS Global Insight, told Bloomberg. “The consumer’s doing relatively well — even with these numbers, it’s one of the strongest parts of the economy. There’s modest inflation, real disposable income gains are relatively robust, and they feel pretty confident.”

Dive Insight:

The unexpected drop in U.S. retail sales in August across so many categories is a bummer after an encouraging report from the Census Bureau earlier this week indicating the largest gains in employment and household income since 2007 — growth that should bode well for consumer spending, the U.S. economy’s main driver.

Real median household income — essentially the middle of middle-income earners — grew by an inflation-adjusted 5.2% from $53,718 in 2014 to $56,516 in 2015, the first annual increase since 2007. The number of full-time, year-round workers increased by 2.4 million in 2015.

But August's sales portend potential trouble ahead for retailers in the second half of the year — and the Commerce Department report shows that e-commerce retailers are not immune.

E-commerce (and catalog) sales suffered a rare drop in August, falling 0.3%, while home improvement sales fell 1.4%, health and beauty sales fell 0.1%, sporting goods/hobby/books/music sales fell 1.4%, and department store sales fell 0.6%. But apparel sales got a lift last month, increasing 0.7% — the largest increase in that category since last year. Electronics store sales rose 0.1%.