Data on Friday morning revealed that U.S. retail sales increased 0.5% in July from the prior month, which was slightly below economists’ expectations but signaling that consumer spending is stabilizing after a sharp decline this spring. Wall Street had forecast a 0.6% rise, according to Bloomberg data. Excluding autos and gasoline, core retail sales rose 0.2% last month.
The July gain represents the second straight month of rising retail sales following declines in April and May. May’s 0.9% increase had stoked concerns over the health of the U.S. consumer, while June’s figures were revised higher on Friday to show a 0.9% month-over-month gain, above the initially reported 0.6%.
Notable contributors to July’s growth included home furnishings, which jumped 1.4%, and non-store retailers, capturing e-commerce spending, which rose 0.8%. However, some sectors remained subdued, reflecting cautious consumer behavior. Sales at food and drinking places fell 0.4%, a notable drop during one of the year’s peak vacation months, while building and garden supply stores declined 1% month-over-month and 2.6% from July 2024.
“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.
The report comes amid a mixed week of economic data including the CPI and the PPI reports. Tuesday’s Consumer Price Index (CPI) showed inflation pressures remain manageable, while Thursday’s Producer Price Index (PPI) suggested that inflation pressures could build in the future.
“Consumers are maintaining a moderate pace of spending, even picking up the pace over the past two months as tariff-price pass-through has been limited so far,” said Kathy Bostjancic, Nationwide’s chief economist. “However, spending growth remains below the 2.8% rate seen in 2024. As more tariff-driven price increases pass through and the labor market softens, household spending will likely face continued headwinds in the months ahead.”
Pump Radar
Stock Alerts