Online retail sales have been a bright spot in otherwise grim dat.
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As consumer spending was a major driver of US economic growth in the second quarter this year, Friday’s retail sales data might suggest a potential cool down of consumer spending and economic growth in the second half of the year. The data raises questions about the robustness of the U.S. economy following unexpectedly strong employment figures released last week.
Retails sales in the USA were unchanged from the reading last month and followed an upwardly revised 0.8% increase in June, which were previously reported to have gained 0.6%. Dennis de Jong at UFX.com said the figures were “neither particularly strong, not catastrophic. showing that the world’s largest economy is merely ticking along”.
Even excluding the volatile energy and food categories, “core” producer prices dropped 0.3% in July, the most since February 2015.
The report said the producer price index for final demand fell by 0.4 percent in July after climbing by 0.5 percent in June. Core PPI – ex-food and energy costs – was -0.3%, and this was +0.4% in June. Basically, these numbers are weaker than expected, and point to less upward inflation pressure than anticipated. Most of the weakness was among younger households who cited higher expenses than anticipated as well as somewhat modest income gains, the University of MI said.
Though GDP growth has been abysmal, consumer spending was relatively strong last quarter. Sales at auto dealerships increased 1.1 percent last month after rising 0.5 percent in June.
Earlier this week, the Atlanta Federal Reserve trimmed its estimate of U.S. GDP growth for the third quarter to an annualized 3.7 per cent, citing an unexpected increase in wholesale inventories.
There was another jump in online sales last month as they continued to grab market share from traditional retailers. With consumers cutting back on discretionary spending, sales at sporting goods and hobby stores fell 2.2%. Receipts at building materials and garden equipment retailers fell 0.5 percent.
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There were declines in sales at electronics and appliance outlets and service stations. Americans also cut back on spending at restaurants and bars.
