Autos, E-Commerce Offer Only Bright Spots in July Retail Sales
Excluding autos, retail sales last month fell 0.3%
Sales at retailers and restaurants held roughly steady at a seasonally adjusted $457.73 billion last month, the Commerce Department said Friday. Sales had climbed 0.8% in June, revised up from an earlier estimate of 0.6% growth. From a year earlier, total retail sales were up 2.3%.
“The July retail sales report was a disappointment,” said Michael Feroli, economist at J.P. Morgan Chase.
Consumer spending has been the main driver of otherwise tepid economic growth this year as steady job gains and rising wages fueled household purchases of goods and services.
The latest retail report suggests a pause in July, though it is too soon to write off the American consumer. Retail represents only a slice of all household outlays—consumption of services make up about two-thirds of all personal expenditures.
Friday’s report showed relatively strong sales at auto dealers and nonstore retailers alongside weakness elsewhere.
Sales at auto and parts dealers rose 1.1% in July.
It isn’t clear how much longer auto sales can support overall consumer spending. Unit sales for the top three auto makers selling in the U.S. fell in July, according to separate data out earlier this month, raising concerns that demand for new cars and trucks had plateaued. Other auto makers more than made up the difference, though, leaving overall sales at a robust seasonally adjusted annualized pace of 17.9 million, according to research firm Autodata Corp.
Department store sales fell 0.5%. American consumers have been shifting their spending from brick-and-mortar retailers to online shopping.
Sales at gasoline stations plunged 2.7%, largely a reflection of lower gas prices and not by itself a major concern. Gasoline prices rose slightly in June but fell in July and remain at multiyear lows. U.S. regular gasoline retail prices this summer are forecast to average $2.19 a gallon, 44 cents lower than last summer, according to the Energy Information Administration.
Consumers have tended to spend much of their savings at the pump since prices started to tumble. If prices remain low, that could easily fuel more spending on other goods and services in the coming months.
Excluding autos, retail sales last month fell 0.3%. Excluding both autos and gasoline, sales were down 0.1%.
The pullback may be just a blip, though some companies don’t expect much of a pickup in the coming months.
“When a consumer is a little uncertain around their future and really trying to figure out what this election cycle really means to them, they are not as apt to spend as freely as they might have even just a couple of quarters ago,” Todd Penegor, president and CEO of The Wendy’s Co. WEN 0.40 % , told investors on Wednesday.
Democrat Hillary Clinton and Republican Donald Trump are offering starkly different visions for the U.S. as the November election nears.
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