The U.S. Census Bureau announced that overall retail sales in July were up 0.7 percent from June and up 3.2 percent year-over-year (YoY), reports CNBC. The advanced retail sales report showed a seasonally adjusted increase of 0.7 percent for the month, better than the 0.4 percent Dow Jones estimate. Excluding autos, sales rose a robust 1 percent, also against a 0.4 percent forecast. Both readings were the best monthly gains since January.
As the numbers aren’t adjusted for inflation, they showed a consumer able to keep ahead of price increases that have been prevalent over the past two years. The consumer price index rose 0.2 percent on the month, indicating solid demand. July’s numbers were boosted by a 1.9 percent jump in spending at online retailers, while sporting goods and related stores increased 1.5 percent, and food service and drinking places rose 1.4 percent.
Total Retail’s Take: Consumer spending held up well as inflation slowed, with retail sales turning in a stronger-than-expected showing for the month of July. Back-to-school sales, Prime Day and major promotions by other brands prompted increased shopping while wage increases gave consumers more money to spend, according to the National Retail Federation (NRF). NRF’s calculation of retail sales — which excludes automobile dealers, gasoline stations and restaurants to focus on core retail — showed July was up 1 percent seasonally adjusted from June and up 3.8 percent unadjusted YoY.
“Online retail is a bright spot in today’s report, up 1.9 percent from June and 10.3 percent from a year ago,” commented Claire Tassin, retail and e-commerce analyst at Morning Consult. “While inflation is moderating, shoppers are still taking advantage of online tools that facilitate price comparisons and find the best deals.”
July’s midsummer sales boost also adds some evidence that the U.S. economy may be able to avoid a much-predicted recession. The current strong momentum comes as a big surprise, but now the key question is, what happens going forward?
“Although inflation has slowed, at 3 percent year-over-year according to the latest data, it remains much higher than desired,” commented Dr. Evan Barrington, vice president of economic analysis and forecasting at TraQline. “To get that down to the Federal Reserve’s 2 percent goal will still take some more work. That said, this progress is still far ahead of where many thought we would be at the start of the year.”
U.S. consumers are “facing stiffer headwinds in the coming months, as cooling wage growth, higher interest rates on rising credit balances, resumption of student loan repayments, and the prospect of resurgent inflation for certain categories threaten to more tightly pinch household budgets,” cautions Kayla Bruun, economic analyst at Morning Consult.
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