The United States Department of Commerce and the National Retail Federation (NRF) reported today that July retail sales saw sequential and annual gains.
The Department of Commerce reported that July retail sales, at $507.5 billion, were 0.5% ahead of June’s $504.9 billion and up 6.4% compared to July 2017. Total retail sales from May through July saw a 6.3% increase compared to the same period a year ago. And Commerce reported that non-store (e-commerce and online) sales were up 8.7% annually, which was below the 10.2% annual increase in June.
NRF reported that July retail sales, which exclude sales from automobiles, gas stations, and restaurants, headed up 0.4% compared to June and were up 4.9% annually on an unadjusted basis. NRF officials said these figures are represent a “solid kickoff” for the third quarter amid worries related to the trade war between the United States and China. Both these sequential and annual figures are up from June, which posted a 0.1% decrease compared to May and a 3.9% annual increase. What’s more, NRF said that its three-month moving average rose 5% annually.
“Today’s numbers mirror the economy, which is in very good shape,” NRF Chief Economist Jack Kleinhenz said, citing consumer confidence, a strengthening labor market and more after-tax dollars in household wallets thanks to tax reform. “Consumer fundamentals remain healthy and continue to provide wherewithal for consumers to drive domestic economic growth. Consumer spending is the backbone of the current economic expansion but the fly in the ointment is uncertainty regarding tariffs. If they escalate, they will no doubt weigh on confidence and household spending.”
NRF’s July numbers come on the heels of an announcement it made earlier this week, when it upped its 2018 retail sales forecast to be up at least 4.5% from a previous estimate of 3.8%-4.4%. The organization stated that it expects to gains to come from tax reform, as well as other “positive economic inputs,” but also cautioned that the impact of tariffs could lower consumer confidence.
Looking at the first half of 2018, NRF said that retail sales rose 4.8% annually and are up 4.4% annually for the most recent three-month moving average. And it also said that it expects GDP to come in at the higher end of 2.5%-3% range.
Some key sector data for July cited by the NRF included:
Retail sales are a direct, and largely current, barometer of economic activity, more so than the aforementioned consumer confidence, which really gauges how consumers “feel” about the economy at a given moment, with feelings and sentiment able to quickly change based on just about anything.
And based on recent earnings calls from publicly-traded freight transportation and logistics services providers, they are also echoing a theme of a healthy economy, specifically a healthy economy buoyed by strong retail sales, which had various executives touting the gains in revenue stemming from things like increased e-commerce activity, which has had a direct impact on things like last, or final, mile logistics, and the ongoing build out and development of warehouses and distribution centers that are needed to help meet increasing demand and uptick in service to meet that higher demand.
James Bohnaker, Associate Director, US Economics, IHS Markit, wrote in a research note that the back-to-school shopping season got off to a solid start in July.
“Department store sales grew 1.2%, while clothing and accessories stores were up 1.3%, after both categories declined in June,” he wrote. “Nonstore (mostly online) sales were another winner (up 0.8%), as more online sales shifted into July because of prominent online sales events such as Amazon Prime Day. The traditional “back-to-school” shopping season is in a state of flux since the introduction of Amazon Prime Day (mid-July), now having completed its fourth year. This seems to be pulling August brick-and-mortar sales into July online sales.”