WASHINGTON (Reuters) – U.S. retail sales unexpectedly fell in August, probably hurt by the effects of Hurricane Harvey on automobile purchases, implying a moderation in consumer spending in the third quarter. The Commerce Department said on Friday retail sales dropped 0.2 percent last month, the biggest decline in six months. Data for July was revised to show sales increasing 0.3 percent instead of the previously reported 0.6 percent leap. Economists polled by Reuters had forecast retail sales nudging up 0.1 percent. Motor vehicle sales tumbled 1.6 percent last month, the largest drop since January, after being unchanged in July. Harvey, which slammed Texas and unleashed unprecedented flooding in Houston, probably dented sales of automobiles. Auto sales are, however, expected to get a boost in the replacement of flood-damaged vehicles. Total retail sales increased 3.2 percent in August on a year-on-year basis, pointing to underlying strength in domestic demand. The Commerce Department said while it could not isolate the effects of Harvey on retail sales, it had received indications from companies that the hurricane had “both positive and negative impacts on their earnings data while others indicated they weren’t impacted at all.” Excluding automobiles, gasoline, building materials and foodservices, retail sales fell 0.2 percent last month following an unrevised 0.6 percent growth in July. These so-called core retail sales correspond closely with the customer component of gross domestic product. Last month’s drop suggested consumer spending could slow in the period. U.S. stock index futures extended losses after the data while prices of longer-dated U.S. Treasuries added to gains. The dollar was trading weaker . DXY. People line up in a Walmart store that reopened Friday after Tropical Storm Harvey in Port Arthur, Texas, U.S., September 1, 2017. REUTERS/Carlo Allegri CONSUMER SPENDING STILL STRONG The weak retail sales report will probably do little to alter expectations that the Federal Reserve will announce a plan to start shrinking its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities in its Sept. 19-20 policy assembly. New trucks are shown available in a Chevrolet dealership in National City, California, U.S., June 30, 2017. REUTERS/Mike Blake The U.S. central bank is expected to raise interest rates again just in December. This season, borrowing costs has increased twice. Consumer spending, which accounts for over two-thirds of U.S. economic activity, increased at a 3.3 percent annualized rate in the second quarter. That boosted GDP growth to a 3.0percent rate in the April-June period. Despite sluggish wage growth, even as the labour market nears full employment, the fundamentals for consumer spending are strong. The stock market is near record highs and house prices have maintained their advance. Last month, sales at building material stores fell 0.5 percent after surging 0.9 percent in July. Clean-up efforts in the wake of Harvey in addition to Hurricane Irma, which struck Florida last weekend, could buoy sales of building materials. Receipts at service stations increased 2.5 percent in August, reflecting higher gasoline prices. Sales at electronics and appliance stores fell 0.7 percent and receipts at clothes stores dropped 1.0 percent after rising 0.5 percent in July. Department store retailers are struggling with falling traffic in shopping malls and increased competition from Amazon.com (AMZN.O) and other online retailers. Sales at online retailers declined 1.1 percent in August, the biggest drop since April 2014. Receipts at restaurants and pubs rose 0.3 percent and sales at sporting goods and hobby stores edged up 0.1 percent. Reporting by Lucia Mutikani; Editing by Paul SimaoOur Standards:The Thomson Reuters Trust Principles.