The U.S. Commerce Department reported Tuesday that retail and food-services sales declined 1.1% in July to $617.7 billion, missing expectations for a 0.3% monthly decline. July's advance follows a 0.7% increase in June (revised up from +0.6% previously reported).
On a monthly basis, excluding auto sales, retail sales were down 0.4%, also missing expectations for a 0.2% monthly advance. Excluding autos and gas, sales were down 0.7% in July, again short vs. expectations for a 0.1% monthly decline. Auto sales are not included because of their high-ticket price that can result in volatile monthly readings.
Core retail sales were down 1.0% in July, missing expectations for a 0.1% increase. This figure includes retail sales, but excludes receipts from auto dealers, building materials retailers, gas stations, office supply stores, mobile homes, and tobacco stores.
While this group is not considered to have as big an impact on trading as the headline number -- unless there is significant deviation from expectations -- we note the group's results, because the group is also what is known as the "control" group and is closely associated with personal consumption expenditure (PCE), which is a large portion of the gross domestic product (GDP).
Digging deeper, the report also shows:
- Department Stores sales: -0.3% MoM and +24.3% YoY
- Miscellaneous store retailers sales: +3.5% MoM and +22.8% YoY
- Electronics & appliance stores sales: +0.3% MoM and +23.6% YoY
- Clothing and clothing accessory stores sales: -2.6% MoM and +43.4% YoY
- Gasoline stations sales: +2.4% MoM and +37.5% YoY
- Food services & drinking places sales: +1.7% MoM and +38.4% YoY
- General-merchandise stores sales: -0.1% MoM and +10.9% YoY
- Health & personal care stores sales: +0.1% MoM and +9.2% YoY
- Nonstore retailers (i.e., e-commerce) sales: -3.1% MoM and +5.9% YoY
- Food & beverage stores sales: -0.7% MoM and +2.3% YoY
- Grocery store sales: -0.4% MoM and +2.2% YoY
- Building material & garden equipment & supplies dealers sales: -1.2% MoM and +7.5% YoY
- Sporting goods, hobby, musical instrument & book stores sales: -1.9% MoM and +13.8% YoY
- Motor vehicle & parts dealers sales: -3.9% MoM and +15.7% YoY
- Furniture & home furniture stores sales: -0.6% MoM and +15.6% YoY
All in, this was a weak print that likely reflects the impact of the delta variant. However, as Jim Cramer and Jeff Marks note Tuesday during the TheStreet's Live video earlier in the morning, there are signs that the variant could be peaking. Because of this, we believe it's important to remind members that this is a backward-looking indicator, and the market is a discounting mechanism, much focused on the future. In the grand scheme of things, delta likely delayed the economic reopening rather than derailed it and what we see in this report is a consumer that "froze" in July as everyone reassess the speed at which they are ready rush back into the economy.
Members interested in digging even deeper can view the report's official release here. As members go through the data, we encourage them to consider both the short-term (MoM) and longer-term (YoY) dynamics at play in the industries in which you are invested.