Retail sales in the United States soared past analyst expectations in July, according to government data released Thursday, helped by the autos segment and bringing some relief to policymakers.
US consumption has remained resilient despite high interest rates, and experts are closely monitoring if this continues to hold up until the central bank begins rate cuts.
A weaker than expected labor market report recently sparked market turmoil, over fears that the world’s biggest economy was in worse health than anticipated.
But in July, overall retail sales came in at USD 709.7 billion, up 1.0% from June’s figure, said the Department of Commerce.
This was significantly higher than the 0.3% bump forecast by analysts at Briefing.com.
But June’s performance was revised downwards — with sales slipping 0.2% in the month instead of being virtually flat as initially estimated.
“Under the hood, what is driving that gain is a rise in auto and gas sales,” said economist Michael Pearce of Oxford Economics.
“The increase in auto sales is simply a bounce back following the cyber-attack on car dealerships in June,” he told AFP.
But he maintained that his expectations remain consistent with consumer spending rising by around two% in real terms for the third quarter.
This would “signal continued resilience” and keep the Federal Reserve on a path of gradual rate cuts “because fears about the health of the economy that could justify a larger cut appear unfounded.”
Excluding motor vehicle and parts, retail sales were up 0.4% from June, said the Commerce Department.
Motor vehicles and parts dealers also saw sales rise 3.6% from June to July, while sales at grocery stores increased 1.0%.
