The United States Department of Commerce reported that retail sales decreased 1.1 percent in July as worries over the Delta variant of the coronavirus curbed spending.
United States retail sales dipped in July as American consumers shifted spending towards restaurants, bars and gas stations while others stayed home as the Delta variant of the coronavirus surged in parts of the country.
Retail sales fell 1.1 percent in July compared to June, data from the US Department of Commerce showed on Tuesday. Retail sales for June were revised 0.7 percent higher.
Retail trade sales were down 1.5 percent from June, but still up 13.3 percent compared to last year, the data revealed.
In a sign of the US’s ongoing economic recovery from the worst days of the coronavirus pandemic, clothing and clothing accessories stores were up 43.4 percent from this time in 2020, while restaurants and bars were up 38.4 percent compared to last year.
Motor vehicle and parts dealer sales fell 3.9 percent in July after a 2.2 percent drop in June, weighed down by limited inventory and an increase in price.
The get-outdoors attitude spurred by warm weather during the US’s summer season has also had an impact on e-commerce, which dropped 3.1 percent in July, a substantial slowdown compared to the prior month.
The dip in retail sales shows that consumers are more cautious in how and where they open their wallets, and concerns about rising inflation could also be curbing spending.
“The details of the retail sales report indicate a higher pace of consumption in Q2 but suggest a more significant Q3 drag from the moderation in disposable income and the arrival of the Delta variant,” Jan Hatzius, an analyst at Goldman Sachs, said in a note on Tuesday morning.
The Dow Jones and the S&P 500 slid from record highs on Wall Street on the heels of weaker-than-expected earnings reports from major retailers Home Depot and Walmart.
Shares of Home Depot fell 4.6 percent after it showed weaker results for US same-store sales for the first time in two years. The dip signalled a cooling in the home improvement boom, which peaked during the pandemic during months of lockdown as Americans threw themselves into do-it-yourself home improvement projects.
Home Depot’s lacklustre earnings report also sent shares of its smaller rival, Lowe’s, down 4.4 percent.
And shares of the world’s top retailer, Walmart, fell 0.3 percent even after it raised its annual US same-store sales forecast. But just because Americans aren’t spending their dollars at retail locations doesn’t mean they aren’t spending, analysts point out.
“While the retail sales report is typically a reliable gauge of the health of the consumer, it continues to provide an incomplete picture as consumers heavily rotate their spending into services,” Lydia Boussour, lead US economist at Oxford Economics, said in a note on Tuesday.
The S&P 500 and the Dow closed at record highs on Monday as investors continue to balance the optimism of a robust economic recovery and fears over a resurgence of COVID-19 cases.