There was another jump in online sales last month as they continued to grab market share from traditional retailers.
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The retail sales report was not all gloom, however – vehicle sales rose by 1.1 per cent on the month, while non-store retail sales were up 1.3 per cent. Analysts had expected a 0.4% increase.
Treasuries rallied and the dollar fell after the figures on sales and producer prices added to speculation the Fed will be in no rush to raise interest rates this year.
The July advance retail sales report revealed an overall unchanged m/m result, below market expectations for a +0.4 percent m/m reading, as compared to the revised +0.8 percent m/m reading that occurred in June (previous +0.6 percent m/m).
The producer prices index (PPI), a measure of how much factories and manufacturers pay for their goods, came in at minus 0.4 per cent on a monthly basis against expectations for growth of 0.1 per cent.
The lack of progress toward the goal has led Chicago Fed President Charles Evans to argue the central bank might want to consider not raising rates again until inflation is clearly back above 2 percent.
The U.S. central bank raised its benchmark overnight interest rate last December for the first time in almost a decade.
Robust consumer spending helped to cushion the blow on the economy from an inventory correction and prolonged drag from lower oil prices, which restricted GDP growth to an average 1% annualised rate in the last three quarters.
Friday’s data suggested consumer spending was cooling after the second quarter’s brisk 4.2 percent rate of increase. The economy created a total of 547,000 jobs in June and July. That said, the Fed’s preferred gauge of price pressures increased only 0.9 percent in the 12 months through June and has been below target since 2012. Most of the weakness was among younger households who cited higher expenses than anticipated, according to the University of Michigan’s preliminary consumer sentiment survey.
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The figures prompted some economists to trim their third-quarter growth forecasts. Receipts at building materials and garden equipment retailers fell 0.5 percent. Sales at gas stations also fell because of lower pump prices. Americans also cut back on spending at restaurants and bars and sales at food and beverage stores recorded their largest drop since May 2011.
