EmailAfter declining in May for the first time in a year, retail sales remained on a positive trend for the second consecutive month. Sales increased 0.5% in July, in-line with Briefing.com consensus and up from a positively revised 0.3% (from 0.1%) in June.
Core sales -- which exclude the highly volatile auto dealers, building material and supply dealers, and gasoline stations -- rose 0.3% in July, their seventh consecutive monthly increase. Even though consumption increased only minimally in the second quarter, the trend in core sales suggests the lack of growth last quarter was due only to statistical manipulations from inflation adjustments.
Nominal consumer demand remains on solid footing. This means corporate earnings should remain stable. Real consumption growth will return as inflation slows.
Auto sales were relatively strong -- up 0.4% in July after increasing 0.5% in June -- but came up short of our expectations developed from the motor vehicle sales report. That data showed a slight surge in light truck sales, which was expected to push the motor vehicle growth higher than June levels.
Excluding autos, retail sales also increased 0.5% in July, slightly above the 0.3% increase in June. The consensus expected retail sales excluding autos to increase 0.2%.
Sales were up across most sectors. Only building materials and supply dealers, sporting goods and hobby stores, and food services and drinking places saw declines in July.
