PRISM Economic Report: US July Retail Sales Print Much Stronger Than Expected

This week’s CPI and PPI readings provided comfort to markets as inflationary woes were somewhat eased as both reports came in cooler than expected. Eyes then turned to the last economic report that was on the docket for scrutiny this week, July retail sales.

Retail sales for July were announced today and came in much stronger than expected with the largest m/m increase since January 2023. Headline increased 1% m/m vs consensus of 0.3%. Much of July’s beat is attributed to a sharp rise in automobile sales which were up 3.6% m/m that was due to a post-cyberattack rebound. Largest gains came from electronic stores, food and beverage stores and health and personal care stores while miscellaneous store retailers and sporting goods stores showed the biggest decline.

Analysts pointed out that online store sales only rose 0.2% m/m which was a bit surprising considering Amazon’s Prime Day event. This stronger than expected report alleviates recent concerns regarding the weakening of the US consumer however, this significant data will likely decrease chances of a 50bps rate cut in September.