Retail gross sales in July 2021 at 1.1% worse than anticipated in July as rising Covid fears hit shoppers
U.S. shoppers cut their purchases even more than expected in July as concerns about the Delta variant of Covid-19 dampened activity and government incentives dried up.
Retail sales for the month fell 1.1%, below the Dow Jones estimate of a 0.3% decline and below June’s upwardly revised 0.7% increase.
Excluding automobiles, sales fell 0.4%, according to figures released by the Commerce Department on Tuesday.
Markets reacted little to the news at first, as futures pegged to the Dow Jones Industrial Average fell more than 200 points and government bond yields were consistently lower.
“Although retail sales declined in July, the outlook for consumer spending remains positive,” said Gus Faucher, US chief economist at PNC. “However, spending growth will shift from goods to services over the next few years, limiting growth in most categories of retail sales.”
Consumers make up nearly 70% of all activity in the United States, so retail sales are closely monitored as a gauge of overall economic health.
Fueled by a series of government economic controls, the buyers helped lift the economy out of the shortest recession in history, which lasted just two months from initial coronavirus fears in February 2020 to April, a month after finance and monetary authorities did one Had launched a series of unprecedented programs to get the nation through the pandemic.
Although July was down from the previous month, revenue of $ 617.7 billion was still a 15.8% increase over the same point in time a year ago.
Most of the monthly decline came from auto and parts dealers, which were down 3.9%. The auto sector was a major contributor to the surge in inflation in 2021, with used car prices skyrocketing in the face of soaring demand.
Clothing stores were down 2.6% and sporting goods, musical instrument and bookstores were down 1.9%. Online sales also fell by 3.1%.
As energy prices continued to rise, gasoline sales rose 2.4%, and the return of bars and restaurants shops boosted food and beverage sales by 1.7%. Catering establishments recorded an increase in sales of 38.4% compared to the previous year.
A separate economic report on Tuesday showed that industrial production was up 0.9%, ahead of the Dow Jones estimate of 0.5% and largely due to an 11.3% increase in vehicle production.
Fed policymakers are watching economic data particularly closely, especially consumer behavior figures.
Central bank officials largely admit that inflation has fulfilled its 2% mandate, but still see room for improvement in the labor market before a substantial tightening of monetary policy is likely. The Fed is expected to announce over the next several months that it will slow the pace of its monthly bond purchases, but is unlikely to start a rate hike until late 2022 or early 2023.
The labor market is making significant strides, with the number of non-farm workers increasing by nearly 1 million in July and the unemployment rate falling to 5.4%. There were more than 10 million job vacancies in June, around 1.3 million more than the total number of the unemployed.
However, policymakers fear the decline could lead to a slowdown in economic activity if Covid cases do not decline. Several Fed officials say that if employment numbers continue to improve over the next month or two, they will start reducing monthly bond purchases before the end of the year.
This is the latest news. Please check again for updates.
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