Broad-Based Advance in U.S. Retail Sales Shows Solid Spending

Lara Rhame, senior economist at FS Investment Solutions, examines U.S. retail sales, which topped estimates with a 0.6 percent gain for the month of July. She speaks on 'Bloomberg Daybreak: Americas.' (Source: Bloomberg)

U.S. retail sales advanced in July by the most this year, with widespread gains from department stores to building materials outlets that signal a robust start to consumer spending in the third quarter, according to Commerce Department figures released Tuesday.

Highlights of Retail Sales (July)

  • Overall sales climbed 0.6% (est. 0.3% gain) after 0.3% advance in prior month (revised from 0.2% decline
  • Sales excluding autos and gasoline rose 0.5% after a 0.3% rise
  • Retail-control group sales, which are used to calculate GDP and exclude the categories of food services, auto dealers, building materials stores and gasoline stations, increased 0.6% following a 0.1% gain
  • 10 of 13 major retail categories showed gains

Key Takeaways

Americans spent more freely in July and upward revisions to sales in the prior two months show strong hiring, limited inflation and low borrowing costs are improving purchasing power. The acceleration bodes well for consumption, which accounts for about 70 percent of the economy.

Auto dealerships and non-store retailers saw the biggest sales increases this year. Internet-driven purchases probably received a boost from the spike in online shopping tied to Amazon.com’s Prime Day event.

Sales strengthened in other categories as well. Receipts at department stores were up by the most in six months, and purchases increased the most since February at sporting goods retailers and building-supply outlets.

Gasoline stations, electronics merchants and clothing chains were the only categories to show sales declines in July. Commerce Department figures aren’t adjusted for prices, so cheaper fuel costs depress results. The retail sales data capture just under half of all household purchases.

Other Details

  • Automobile dealers’ sales rose 1.2 percent after a 0.9 percent gain the previous month
  • Retail sales excluding autos rose 0.5 percent after 0.1 percent increase
  • Receipts at gasoline stations fell 0.4 percent
  • Sales increased 1.2 percent at building-supply retailers, 1 percent at department stores and 1.3 percent at Internet merchants

— With assistance by Chris Middleton

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