Retail sales in July rose 0.5% from the prior month, a rise that was slightly below Wall Street forecasts but a sign the consumer continues to steady the ship after a dramatic drop in spending this spring.
Economists had expected retail sales to rise 0.6% from the prior month in July, according to data from Bloomberg. Excluding autos and gas, retail sales rose 0.2% last month.
Friday’s report marks the second straight month retail sales rose after two months of declines in May and April, with May’s 0.9% heightening fears over the health of the US consumer. June’s retail sales were also revised higher on Friday, with new data showing sales jumped 0.9% from the prior month, more than the 0.6% rise initially reported.
Notable sales gains in July came from home furnishings, where sales rose 1.4% last month. Non-store retailers, which capture e-commerce spending, saw sales rise 0.8% in July.
The headline gain in July’s retail sales figures was still flatter in some underlying categories, suggesting consumers remain cautious.
Sales at food and drinking places fell 0.4%, a notable drop given July is one of the year’s peak months for vacations. Building and garden supply stores also saw a 1% drop in sales last month, with sales for these retailers also falling 2.6% from the same month last year.
“Retail sales do not give the economy a complete bill of health, but at least the consumer is not in headlong retreat and the outlook for continued moderate economic growth this quarter is positive,” said Chris Rupkey, chief economist at FWDBONDS.
Friday’s data follows what’s been a mixed week on the economic data front, with the Consumer Price Index (CPI) report on Tuesday showing inflation pressures for consumers remain manageable for now, while the Producer Price Index (PPI) Thursday morning suggested pressures are building for future inflation.
“Consumers maintain a moderate rate of spending and even picked up the pace in the past two months as the tariff-price pass-through has been limited thus far,” said Kathy Bostjancic, Nationwide’s chief economist.
“However, despite the improvement in consumer spending the past few months, the pace remains well below the 2.8% rate in 2024 and consumer spending. Furthermore, as more tariff-induced price increases pass through to the consumer and the labor market continues to soften, we see household spending to continue to face headwinds in the coming months.”
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