Despite worries about spending fatigue after a strong second quarter and hand-wringing about auto sales, the July retail sales report was solid in most areas, explained analysts at Wells Fargo.
Key Quotes:
“Retailers reported a 0.5 percent monthly sales increase in July, and the growth was not concentrated in any particular area. There were more packages on porches and stoops as non-store retailers notched a 0.8 percent increase during the month. Although, in a bit of a temporary trend reversal, online retailers were outpaced for once by more traditional retailers, which also did well in July, with department store sales up 1.2 percent and clothing stores up 1.3 percent.”
“After consumer spending surged in the second quarter, there was concern that fatigue might set in during the third quarter, but that was not evident in today’s report for July retail sales. Despite a downward revision to June’s increase to just 0.2 percent from an initially reported 0.5 percent, the rest of the report offered an upbeat assessment of the state of U.S. consumers during the summer quarter.”
“There could be some boost to auto sales from all the tariff discussion in the news. Some auto dealers have reported that on-the-fence buyers have found some motivation in the recent tariff talk, reckoning prices may go up if sweeping auto tariffs went into effect.”
“To get a sense of spending outside of autos and gas (as well as building materials), we look to the “control group” category which excludes these items, and, in July, that category increased 0.5 percent.”
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