2026-08-14 · etfs

US retail sales post first decline in nine months in July

U.S. Retail Sales Drop in July for First Time in Nine Months

U.S. retail sales declined in July for the first time in nine months, according to a Commerce Department report released on Friday. The drop, which was the largest in 14 months, signals a marked slowdown in consumer spending at the start of the third quarter, as reported by Reuters.

The unexpected fall was partly attributed to the fading effect of generous tax refunds and the shift of Amazon's Prime Day event from July to June, which had boosted sales in the previous month. Lower gasoline prices also reduced receipts at service stations.

The report, combined with unexpected job losses in July and mild inflation readings, has strengthened financial market expectations that the Federal Reserve will hold interest rates steady in September, unless August data on prices and employment surprise to the upside.

Retail sales dropped 0.6% last month after an unrevised 0.2% gain in June. Economists polled by Reuters had forecast a 0.1% increase. On a year-over-year basis, retail sales rose 5.0% in July.

The decline was led by a 2.2% decrease in sales at nonstore retailers, while motor vehicle and parts dealers saw a 1.8% drop. Sales at electronics and appliance stores fell 0.5%, and service station receipts declined 0.9% due to lower gasoline prices. However, clothing stores rebounded with a 1.9% increase, likely boosted by back-to-school shopping.

Receipts at food services and drinking places, a key measure of household finances, increased 0.5% after a 0.4% rise in June. Sales also rose at furniture, building material, garden equipment, miscellaneous retailers, and health and personal care outlets, while sporting goods, hobby, musical instrument, and book stores were unchanged.

Economists noted that consumers are becoming more sensitive to higher prices and more selective in their purchases. Although the boost from tax refunds has faded, a stock market rally has increased household wealth, reducing the likelihood of a collapse in consumer spending.

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