Retail sales fell more than expected in July as recovery continues

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American shoppers pulled back their spending in July even more than economists expected as COVID-19 cases surged, inflation continued to flare and shortages hampered supply of various goods, the feds said Tuesday.

Retail sales for the month fell 1.1 percent from June, according to new data from the Commerce Department.

That’s a steeper decline than the 0.3 percent drop expected by economists surveyed by Dow Jones and comes after a 0.7 percent increase in June, the feds said.

Excluding cars, which have been struck by supply-chain issues and a global microchip shortage that’s limited inventory, sales fell 0.4 percent, according to the feds.

Compared with a year ago, retail sales were still up 15.8 percent.

American shoppers pulled back their spending in July even more than economists expected as COVID-19 cases surged.
AFP via Getty Images

Sales dropped across various categories, especially autos as well as apparel, sporting goods and furniture. Online sales also dropped 3.1 percent from June.

However, restaurants and bars saw sales increase 1.7 percent from the month prior, or 38.4 percent from a year ago, bucking the broader trend and showing a bright spot for one of the sectors that was hardest hit by the pandemic.

And with energy prices continuing to surge, gas sales increased 2.4 percent from June, according to the data.

People shopping in a mall.
Retail sales for the month fell 1.1 percent from June.
Liu Guanguan/China News Service via Getty Images

Retail sales rose rapidly in the spring and summer as government stimulus boosted Americans’ cash piles and the economic reopening gained traction as COVID-19 lulled.

But spending now appears to have stalled out and is beginning to decline again as COVID-19 cases surge due to the spread of the Delta variant of the coronavirus and the drying up of government stimulus.

Supply-chain constraints have also hurt sales in affected industries as businesses can’t provide consumers with as many goods as they want, holding back the economy recovery.

Shoppers enter the store as discount posters are displayed on the window.
Shoppers enter the store as discount posters are displayed on the window.
KENA BETANCUR/AFP via Getty Images

But a separate economic report Tuesday showed that those supply-chain kinks might be easing as industrial production rose 0.9 percent, more than the 0.5 percent expected by economists.

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