Washington—Retail sales edged up in July helped by increases in clothing and general merchandise stores, the U.S. Department of Commerce reported today. The rise was the biggest since December 2012.
Sales in the so-called “core” retail sales—excluding automobiles, gas and building supplies—rose 0.5%, exceeding economists’ estimate for a 0.3% rise. Economists pay close attention to retail sales as an indicator of the nation’s economic help since consumer spending accounts for some 70% of the U.S. economic activity.
Nine of 13 major retail categories posted gain last month, led by clothing and accessories, and general merchandise retailers. Sales of clothing and clothing accessories increased 0.9% seasonally-adjusted month-to-month and increased 5.3% unadjusted year-over-year, the National Retail Federation (NRF) reported.
General merchandise retailers posted a 0.4% gain from June (a 1.1% increase from July 2012) and department stores were up 0.6% (a 4.8% decline from July 2012). Nonstore retailers, which include e-commerce sites, had a 0.1% increase (8.8% up from July 2012).
The Commerce Department said total retail sales (including cars, gas, and restaurants) rose 0.2% to $424.5 billion and were up 5.4% compared to July 2012. The June results were revised from a 0.4% increase to a 0.6% increase. Moreover, the results appear better than the July comparable store figures released last week.
‘We Making Gradual Headway’
“Consumers continue to grind forward in July, marking 13 consecutive months of retail sales gains,” said Matthew Shay, NRF president/ceo. “However consumers alone can’t be expected to shoulder the burden of the economy. Fiscal and monetary policy uncertainties combined with stagnant economic and employment conditions continue to breed a volatile market with extreme swings in consumer spending. The economy can’t seem to maintain any amount of momentum. We just can’t seem to pull ourselves up.”
But some economists are more optimistic about the July figures. According to Michael Brown, economist at Wells Fargo Securities LLC, which Bloomberg refers to as “the top forecaster of retail sales,” “We’re seeing sales pick up in multiple categories—that’s a promising sign that consumer spending might be a little bit stronger in the third quarter. We’ve seen wage and salary growth continue to expand with the pace of employment. That’s helped support some additional consumer activity.”
Paul Dales, senior economist at Capital Economics, said the Commerce Department results were “consistent with a decent acceleration” in consumer spending in the current July to September quarter.
“Consumers are still able to go out there and spend despite headwinds from tax increases and the sequester,” said Omair Sharif, economist at RBS Securities Inc. “Job growth is continuing at a moderate clip and we’re making gradual headway.”
Other economists, however, cautioned that while back to school categories such as apparel, accessories and sporting goods, posted gains, there were “surprising declines” in home-based categories, such as building materials and furniture stores.
“Even with modest employment gains and steady consumer confidence, Americans remain in a cautiously-positive spending pattern,” said Jack Kleinhenz, chief economist at NRF. “While clothing and sporting goods retailers saw modest gains with early back-to-school shopping, home-based retailers saw marked decreases, possibly indicating the end of the year-long housing boom. This month’s retail sales report will make any decision on tapering that much harder for policymakers in D.C.”