US retail sales unexpectedly rebounded in August as Americans ramped up purchases of motor vehicles and dined out more amid lower gas prices, but demand is cooling as the Federal Reserve aggressively raises interest rates to fight inflation.

Consumer spending, however, is likely to remain supported by persistent strength in the labour market, with other data on Thursday showing the number of people filing new claims for unemployment benefits last week fell to the lowest level in more than three months.

The data was among the last batch of reports released before the Fed’s policy meeting next Wednesday. Together with a surprise increase in consumer prices in August, the reports likely give the US central bank ammunition to deliver a third consecutive 75-basis-point rate hike.

“Demand appears to be slowing this quarter, but job losses look modest at this point of the economic cycle,” said Christopher Rupkey, chief US economist at Fwdbonds in New York. “The storm clouds of recession threatening the economy have blown further offshore and this will likely convince Fed officials to keep their foot down even harder on the brakes.” — Reuters