Service spending has been pretty robust in recent quarters, so that segment could have to carry the economic load again if the USA hopes to hit respectable growth numbers in July, August and September.
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The Commerce Department said Friday that advance estimates put retail food and services for July at $457.7 billion, the same as the previous month but up 2.3 percent year-on-year.
Compared with a year ago, most retailers have seen larger sales, but none more than internet sales, which were up 14.1 percent year-over-year in July.
Core sales, the figures that are used to calculate gross domestic product and which exclude such categories as auto dealers, gasoline stations and building materials merchants, were also little changed last month after 0.5 percent increase in June.
Last month’s flat reading for retail spending followed increases of 0.8 per cent in June, 0.2 per cent in May and a robust 1.2 per cent increase in April.
This mid-summer retail sales report has a couple key stories to tell: When Americans are buying, many are saving their dollars to buy cars, and they’re buying a lot of the other stuff online. The median forecast in a Bloomberg survey called for a 0.4 percent rise in July. The only other bright spot was non-store retailers, which includes online sales, which increased 1.3% over June.
The dollar fell and gold rose on the news, but economists were generally more sanguine about the somewhat disappointing sales result, given that retail sales are often volatile and the flat report comes after some healthy ones.
The stalling of purchases followed a 0.8 percent gain in June that was stronger than initially estimated, Commerce Department figures showed Friday in Washington. “The poor showing makes any likelihood of a rate hike this year all the more distant”.
Other data on Friday showed producer prices recorded their biggest drop in almost a year in July amid declining costs for services and energy goods.
While Friday’s data suggested consumer spending was cooling after the second quarter’s brisk 4.2 percent rate of increase, economists still expected growth in consumption to top a 2.5 percent pace in the current quarter.
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The drop in ex-auto sales was partly due to a 2.7 percent slump in sales by gas stations, which fell amid lower gasoline prices.
