U.S. retail sales were virtually unchanged in July from the month before, according to a new U.S. Commerce Department report, but were 3.7% higher than compared to the same time a year earlier.
This is the poorest month-to-month showing in six months for this measure that drives about two-thirds of the American economy and is lower than many analysts were expecting.
Excluding autos, retail sales moved up only 0.1% in July from June but have gained 3.1% over the past 12 months. Auto sales alone fell 0.2% in July, the second consecutive monthly decline.
The July performance follows an unrevised overall 0.2% gain in June and a May hike of 0.4%, down from the earlier 0.5% increase.
“Retail sales were unchanged at the start of the third quarter, calling into question more optimistic expectations of 3% to 4% gross domestic product [increase] in the second half,” said Lindsey Piegza, chief economist at the investment firm Sterne Agee. “Since a short-lived rebound in sales in February and March, the consumer has continuously slowed consumption”.
She said if the consumer is not out spending, the economy will struggle to maintain the average 2% pace of the recovery, let alone an elevated 3% or better pace.
‘It all comes down to jobs and income growth. While headline job creation has been impressive as of late, top-line job growth has not been sufficient to translate into wage pressures, without which the consumer will remain constrained,” said Piegza