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U.S. retail sales rose unexpectedly in August as a pickup in purchases across most categories more than offset weakness at auto dealers, showing resilient consumer demand for merchandise.

The value of overall retail purchases climbed 0.7% last month following a downwardly revised 1.8% decrease in July, Commerce Department figures showed Thursday. Excluding autos, sales advanced 1.8% in August, the largest gain in five months.

The median estimate in a Bloomberg survey of economists called for a 0.7% decline in overall retail sales, with forecasts ranging from a 3.3% drop to a 1.1% gain.

U.S. stock-index futures pared losses and bonds slipped after the report.

The surprising improvement in sales, underpinned in part by back-to-school shopping and payments for millions of families with children, suggests healthy demand for goods. The report showed firmer receipts at online retailers, general merchandise stores, furniture outlets and grocery stores.

The Delta variant is curbing demand for services such as travel and leisure, which may be allowing Americans to shift their spending back to goods. The retail sales data showed receipts at restaurants and bars, the only services-spending category in the report, stagnated in August. Meantime, grocery-store receipts climbed 2.1%.

“While spending on goods was much stronger than we anticipated, that presumably will just add to the shortages seen in recent months, while the flatlining of spending in restaurants and bars suggest that the broader recovery in services consumption probably faltered,” Michael Pearce, senior U.S. economist at Capital Economics, said in a note.

A surge in COVID-19 infections, rising prices and persistent supply chain challenges prompted a wave of downgrades to third-quarter economic growth forecasts in recent weeks.

Earlier this month, economists at Goldman Sachs Group Inc. downgraded their third-quarter consumption forecast to a 0.5% annualized decline because of delta’s impact on services spending.

Category breakdown

According to the Commerce Department’s report, 10 of 13 categories registered sales increases. Sales decreased at car dealers, electronics and appliances outlets and sporting goods and hobby stores.

Motor vehicle and parts dealer sales fell 3.6% in August after a 4.6% slide a month earlier. That reflects the surging prices and limited inventory that have depressed auto sales to their weakest level in more than a year, according to Wards Automotive Group.

Americans have also been confronted with higher prices across a variety of goods and services in recent months as businesses pass on—at least in part—extra costs associated with constraints on materials and labor. The degree to which that played a role in the retail sales data is not clear as the figures are not adjusted for price changes.

So-called control group sales, which are used to calculate gross domestic product and exclude food services, auto dealers, building materials stores and gasoline stations, jumped 2.5% in August—the most in five months.

—With assistance from Kristy Scheuble, Sophie Caronello and Olivia Rockeman.