In this morning’s data, Retail Sales increased 0.5% in July, slightly less than expected, and the previous month was revised considerably higher. The Control Group, which is a closer measure of the inputs for GDP that excludes sales for food, autos, building materials, and gas stations, increased 0.5% in July, slightly above expectations, and the previous month’s increase was also revised higher.
Reviewing the various categories, monthly sales for Motor Vehicle & Parts Dealers, up 1.6%, and Furniture & Home Furnishings, up 1.4%, were relatively strong while monthly sales at Miscellaneous Store Retailers, down -1.7%, and Food Services & Drinking Places, down -0.4%, were relatively weak.
Overall, retail sales increased in July, for both the headline figure and the control group. With substantial revisions higher for both measures in the previous month, it suggests consumers were still spending during the summer season. In July, individuals increased spending on cars and home furnishings, while pulled back a bit on eating away from home.
The Consumer Price Index and Producer Price Index data reported earlier this week indicated inflation measures are trending upward, especially for core rates that exclude food and energy. Meanwhile, there were substantial negative revisions to last month’s payrolls report. With a consumer continuing to spend, inflation trending upward, and a possible weakening labor market, the Federal Reserve has a lot to consider as they contemplate policy in the weeks ahead.
In all, the 10-year US treasury yield ticks higher following the report and equity futures are mixed as we head into the market open.
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