American customers were suddenly careful a month ago, with retail deals unaltered from June, the U.S. Commerce Department reported Friday. Analysts had expected that general retail deals would rise 0.4%.
U.S. retail sales were unexpectedly flat in July as Americans cut back on purchases of clothing and other goods, pointing to a moderation in consumer spending that could temper expectations of an acceleration in economic growth in the third quarter. Deals at service stations additionally fell as a result of lower pump costs. Barring gas, deals rose 0.2% month-over-month.
Customers burned through 1.1% more on cars in July, one of only a handful couple of brilliant spots in the retail sales report.
Deals were up 2.3% from a year prior. Excluding automobiles, gasoline, building materials and food services, retail sales were also unchanged last month after an unrevised 0.5% increase in June.
Friday’s data suggested consumer spending was cooling after the second quarter’s brisk 4.2 percent rate of increase, so July’s figures speak to a significant cooling from that lively pace and are bringing up issues about whether the control will be sufficient to hurt economic growth in the third quarter.
Consumer spending typically represents up to 70% of GDP.
Prior this week, the Atlanta Federal Reserve trimmed its assessment of U.S. Gross domestic product development for the third quarter to an annualized 3.7%, refering to a sudden increase in wholesale inventories.
“While we don’t expect retail spending to stall…the July report won’t inspire much confidence in the economic momentum at this point,” said TD senior economist Michael Dolega in a morning commentary.
“As such, the poor showing makes any likelihood of a [U.S.] rate hike this year all the more distant,” he said.
Jennifer Lee, senior economist at BMO, called it “a disappointing July, for sure” but said it wasn’t too worrying.
“If we didn’t see steady job growth over the past few months, this would be a little more brow-raising,” she said.
With consumers cutting back on discretionary spending, sales at sporting goods and hobby stores fell 2.2 percent. Receipts at building materials and garden equipment retailers fell 0.5 percent.
There were declines in sales at electronics and appliance outlets and service stations. Americans also cut back on spending at restaurants and bars.