Monthly US Retail Sales declined across the board in July. The data also missed estimates.

Here are the headlines:

  • Total Retail Sales -1.1% (-0.2% decline exp, +0.7% in June which was revised higher from +0.6%)
  • Total core Retail Sales (ex autos) -0.4% (+0.2% exp, +1.6% in June again revised higher from +1.3%)

US Retail Sales

The worse than expected data on the headline sales was driven by a -3.9% reduction in motor vehicles and parts sales, along with a -2.6% decline in clothing.

Supply chain issues are impacting still auto production and this is a reflection more on the supply than weakness in demand. However, taking the autos out of the data and the -0.4% decline is still a disappointment. This also comes as 25 US states also cut Federal jobless benefits in the month. 

However, interestingly there were upward revisions to the prior month which has helped to balance out at least some of the disappointment in July’s data.

Year on year data shows a massive +15.8% growth, although there is a moderation underway after +18.7% growth in the year to June 2021. Expect this moderation to continue in the coming months as the economic re-opening settles down.

Retail Sales

What does this mean?

Retail sales data has been expected to moderate in the coming months after the re-opening spending blitz as the US economy re-opened in Q2. 

Initial Market Reaction

This seems to have played into the prevailing trend of the day, one of USD recovery. However, it is interesting to see yields picking up, gold falling and US equity futures also higher. This would suggest a risk-positive reaction, which we find hard to believe will continue as the session goes on. USD strength may continue though.