After showing a period of relative strength and growth, the party is over when it comes to U.S. retail sales, which missed expectations and flattened out in July instead of growing by .4 percent. Americans, it seems, were less interested in purchasing clothing or goods, and that moderation could act as a pretty significant headwind of economic growth during Q3 if the trend holds out.
According to the U.S. Commerce Department, the flat result last month followed an upwardly revised .8 percent increase in June. All in, retail sales were found to have increased .6 percent in June.
Sales were up almost 2.3 percent from a year ago — if automobiles, gasoline, building materials and food services are removed from the count. Retail sales were also unchanged last month after an unrevised 0.5 percent increase in June.
Core retail sales correspond most closely with the consumer spending component of gross domestic product. Economists had forecast overall retail sales rising 0.4 percent and core sales climbing 0.3 percent last month. Strong spending in the consumer sector helped overcome an inventory correction and low oil prices which kept GDP growth to an average annualized rate of only 1 percent over the last three quarters. The newest data indicate that consumer spending is cooling off after a 4.2 percent increase during Q2.
The spending picture clocked in worse than expected – but the labor market remains strong, as do the housing and stock market.
According to the latest figures, the economy crated 547,000 jobs in June and July.
The Atlanta Fed is currently forecasting the economy to grow at a 3.7 percent annualized rate in the third quarter.
Auto sales were up in July – 1.1 percent after rising 0.5 percent in June – and online sales increased to 1.3 percent.
Online retail sales jumped 1.3 percent, while receipts at clothing stores fell 0.5 percent. Spending on electronics and dining out both saw dips.
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