United States: Retail sales gain momentum in July
August 15, 2017
Retail sales finally pulled through in July following several months of mediocre to nil growth and posted the strongest reading in seven months. Sales increased 0.6% from the previous month, up from June’s revised 0.3% gain (previously reported: -0.2% month-on-month) and surpassed market expectations of a 0.3% rise.
Healthy gains in July were fueled by strong growth across the board. The expansion could be, in part, a result of record-breaking sales on Amazon’s Prime Day, which took place on 11 July, as non-store retail sales —a proxy for e-commerce sales—grew 1.3% from the previous month. Several market analysts had expected Amazon’s yearly massive deal day to cause a substitution effect that would hinder sales at traditional brick-and-mortar stores, however the report showed that department stores and other forms of retail likewise experienced a boost in sales. On the other hand, electronics and appliance stores and clothing and clothing accessories stores took a slight hit in July.
On a year-on-year basis, growth in retail sales accelerated to 4.2% in July from a revised 3.4% in June (previously reported: +2.8% year-on-year). Non-store retailers, which include e-commerce, posted a substantial 11.5% increase in sales in July, taking more market share away from traditional department stores, whose sales declined 1.3%. Annual average retail sales growth recorded its highest print in over two years at 4.0%, up from 3.9% in June. Stronger retail numbers could translate into boosted private consumption results in Q3 GDP growth.
Author: Lindsey Ice, Economist