- Retail sales rose by 0.7% in July – more than double the median consensus forecast for a 0.3% print. The streak in monthly gains was extended to five months. Revisions to the prior month shaved down June’s tally a touch, from 0.4% to a still healthy 0.3%.
- The gain was broad-based, with most categories improving on the month. Among the more volatile groups, autos & parts dealers (-0.6% m/m) was the only category to retreat in July, while sales were up at gasoline stations (1.8%), food services (1.1%) and building material & garden equipment stores (0.2%).
- The retail sales “control group”, which excludes the aforementioned volatile components (gas, autos, building materials and food services), posted an even more impressive gain than the headline, rising at 1% – well ahead of expectations for 0.4%.
- Among the remaining categories, non-store retailers (2.8%) continued to lead the way, followed by electronics & appliance stores (0.9%), clothing (0.8), food & beverage (0.6%) and general merchandise stores (0.6%).
- Pulling back on the month were sales at sporting goods (-1.1%) and health & personal care stores (-0.2%), with July marking the only month-on-month decline in both so far this year.
Key Implications
- The American consumer continued to power through in July, with retail sales coming in well above expectations on the month and extending their winning streak to five months. While the high bar for consumption that was set in the second quarter (4.3% annualized) will be a hard act to follow, a solid start to third-quarter retail sales suggests that consumers will remain an integral part of the growth story. Today’s report brings our tracking up for third-quarter consumer spending to around 3% annualized.
- The fact that the American consumer has proven resilient despite facing plenty of adversity (i.e. trade war uncertainty, equity market volatility) has been an overarching theme over the past year. This resilience however, will be further tested in this year’s home stretch, as the trade war with China begins to entangle a larger share of consumer products into its web.
