Retail Sales are the total amount of merchandise and related services sold to consumers. It is considered a sign of strength of U.S. Consumer spending, which accounts for roughly two-thirds of the economy. This indicator also provides insight into which areas of the retail space are experiencing strong sales.
In July, retail sales remained nearly unchanged at $682.8 billion, missing estimates of a 0.2% advance. However, excluding auto sales yielded a modest 0.4% advance, and excluding purchases of gasoline as well showed a 0.7% increase. Three of the four broad categories that make up the report saw higher sales last month. Spending on electronics and appliances rose 0.4% to $7.6 billion, sales at sporting goods and hobby stores increased 0.1% to $9.2 billion, and spending at bars and restaurants likewise rose by 0.1% to $86.1 billion. Clothing and apparel sales declined 0.6% to $25.9 billion, although the previous month’s print was revised to the upside.
Consumer spending remained largely flat last month as gas prices, a significant driver of consumer spending, continued to decline. Retail sales are not adjusted for price movements, so higher prices result in higher sales—all else equal. The opposite is true when prices decline, and outlays at gas stations fell 1.8% in July. Having to spend less money at the pump allowed consumers to shift their spending elsewhere; online shopping saw a particularly strong boost, increasing by 2.7% to $110.6 billion. Amazon held its famous Prime Day event in July, likely contributing to the increase in sales at non-store retailers. Overall, the report shows that consumers remain in relatively good shape, and will likely be able to maintain their spending habits as fuel prices normalize. In an ironic twist, many retailers are now dealing with excess inventory and are likely to offer enticing discounts to move this inventory, which will likely further boost retail sales.
August 17, 2022