Retail sales numbers for the month of July issued late last week by the United States Department of Commerce and the National Retail Federation (NRF) were largely in line with those for the month of June.
Commerce reported that July retail sales at $457.7 billion were essentially flat with June, following three months of gains and up 2.3 percent annually. And it added that total sales for the May 2016 through July 2016 period were up 2.5 percent from the same period a year ago.
The NRF reported that retail sales in June were up 1.7 percent annually, down from June and May’s 5.1 percent and 3.2 percent annual increases. It also noted that in July, the three-month moving average of retail sales on a year-over-year basis increased 3.3 percent unadjusted.
While [this] release is weaker than expected, recent job and income gains support the notion that consumers do have the ability to spend, and I suspect that July’s flat performance is transitory and does not signal a slowdown,” said NRF Chief Economist Jack Kleinhenz in an NRF blog posting. “July’s spending remained at June’s strong level, even though consumers appear to have taken a breather. Retailers continue to suffer from weak pricing, which could in part also explain [this] flat figure.”
Earlier this year, the NRF said it is calling for 2016 retail industry sales, excluding automobiles, gas stations, and restaurants, to see a 3.1 percent annual increase.
While this estimate comes in higher than the 10-year average of 2.7 percent, it falls short of the NRF’s 2015 estimate of 4.1 percent. The Washington, D.C.-based organization also said it expects non-store sales to grow between 6-9 percent in
2016.
The NRF offered up some other metrics that it maintains point to a strong 2016 on the retail sales front, including:
-2016 economic growth to be in the 1.9 percent-to-2.4 percent range; and
-an estimated 190,000 new jobs added per month, which is off from 2015 but consistent with a growing labor market
Even though retail sales activity saw some gains in July, that has not been fully reflected in the freight transportation and logistics sectors, which remain hampered by low demand and declining volumes to a large degree, as has been the case in previous months.
Stifel Fixed Income Chief Economist Lindsey Piegza was bearish on July’s data, calling them unexpectedly weak for the beginning of the third quarter and significantly weaker than expected.
“This…disappointing retail sales report offers the first indication of a decline in consumer momentum,” said Piegza.”Heading into the second half of the year, consumers are unlikely to be the solid support they were in Q2, removing or at the very least, hindering one of the key sectors of strength for the economy. Without a marked turnaround in business investment, amid waning consumer activity, growth will remain lackluster for some time.”