WASHINGTON–Retail sales held up better in July than many had expected as inflation slowed, according to new Commerce Department data.
The advanced retail sales report showed a seasonally adjusted increase of 0.7% for the month, better than the 0.4% Dow Jones estimate, noted CNBC. Excluding autos, sales rose a robust 1%, also against a 0.4% forecast. Both readings were the best monthly gains since January, the report added.
An Amazon-Size Boost
“July retail sales exhibited robust acceleration, but largely owing to monthly trends. A surge in online sales driven by Amazon Prime Day, alongside continued summertime spending at bars and restaurants drove growth in core group sales, and were slightly offset by declines in auto spending, reflected by a relatively lower total sales print,” said NAFCU Economist Noah Yosif. “Long-term headwinds to consumption remain poised to accelerate and overshadow these gains, aligning with the Fed’s strategy for chipping away at the remnants of inflation.
Hold On a Minute…
“While July’s print does not individually provide evidence of the deceleration in consumption which the Fed seeks, a sour outlook for consumers, defined by a dwindling excess spending capacity and reduced access to credit, could still provide validation for maintaining its terminal rate given the likelihood of increased spending pressures,” Yosif added.
CNBC further noted in its analysis that as the numbers are not adjusted for inflation, they reveal 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% on the month, indicating solid demand, the report added.
The Specifics
Specifically, the July report shows:
- There was a 1.9% jump in spending at online retailers
- Sporting goods and related stores increased 1.5%
- Food service and drinking places rose 1.4%
- On the downside, furniture sales slumped 1.8% and electronics and appliance stores reported a 1.3% drop
- Gas station sales rose just 0.4% on the month despite rising prices at the pump
“The report adds to the narrative that the U.S. economy may be able to avoid a much-predicted recession brought on by a series of Federal Reserve interest rate hikes aimed at controlling inflation,” CNBC stated.
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