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Retail Sales: Further Moderation As July Revised Lower

September 16, 2020

Bottom Line: Total retail spending was higher for the fourth straight month, but gains were slower than expected in August, and July sales were revised lower. Home-related and clothing segments fared the best in July among the core components. As schools restarted without sports in many places, sales at sporting goods retailers slumped in July and August after strong sales in May and June. Overall, thanks to the massive fiscal stimulus that more than offset lost wages (at the aggregate level) due to the shutdowns, retail sales are above pre-pandemic levels. But with many stimulus programs coming to an end and little progress on new legislation, the pace of gains has slowed and will likely continue to do so. Expect more volatility among segments as consumer preferences continue to shift following the pandemic -- but the overall pace of sales looks likely to settle into a trend rate a bit below the long-run trend of 3.7%.

Retail Sales ROSE by 0.6% in August, compared with the market consensus for an increase of 1.0%. The July estimate was revised lower from 1.24% to 0.87%. Retail sales are now 2.6% ABOVE their year-ago level; just a year ago, the year over year growth rate was 4.2%. Spending at motor vehicle dealers climbed by 0.2%.

Core Retail Sales ROSE by 0.7%, compared with the market consensus for an increase of 1.0%. The July estimate was revised lower from 1.90% to 1.35%. Core retail sales are now 2.1% ABOVE their year ago level; just a year ago, the year over year growth rate was 3.5%.

In August, gains at:

  • building materials (+2.0%),
  • clothing stores (+2.9%),
  • health and personal care (+0.8%),
  • furniture & home furnishing (+2.1%).
were partially offset by declines in:
  • grocery stores (-1.2%),
  • sporting goods, hobbies, etc. (-5.7%),
  • general merchandise stores (-0.4%), and,
  • miscellaneous retailers (-0.2%).

Core Retail Sales ex Gasoline ROSE by 0.68% and are now 4.0% ABOVE their year-ago level; just a year ago, the year over year growth rate was a moderate 4.3%

Article by Contingent Macro Advisors