(Bloomberg) -- U.S. retail sales fell in July by more than forecast, consistent with a steady shift in spending toward services and indicating consumers may be growing more price conscious as inflation picks up.
The value of overall retail purchases dropped 1.1% last month following a upwardly revised 0.7% increase in June, Commerce Department figures showed Tuesday. The median estimate in a Bloomberg survey of economists called for a 0.3% decrease. Excluding autos, sales decreased 0.4% in July.
The data suggest that consumers are beginning to curb spending on merchandise in favor of services now that many pandemic-related restrictions have been lifted. At the same time, the emergence of the delta variant poses a risk to economic activity and could curb demand for services like travel and entertainment.
Higher prices for things like groceries, meals out, personal care and apparel risk limiting discretionary spending in the coming months. A report last week from the University of Michigan showed buying conditions deteriorated to the lowest since April of last year as inflation remained elevated. The retail sales data are not adjusted for price changes.
Economists forecast consumer spending to grow at an annualized 4.5% pace in the current period, significantly slower than the pace estimated a month ago and a sharp deceleration from the sizzling 11.8% rate seen in the second quarter.
This week includes earnings reports from many retailers, including Target Corp. (NYSE: TGT ) and Macy’s Inc. Earlier Tuesday, Walmart (NYSE: WMT ) Inc. posted stronger-than-expected comparable sales and the retail giant boosted its full-year outlook.
Results from Home Depot Inc (NYSE: HD )., however, showed weaker-than-expected results that signal a cooling in the home-improvement boom.
©2021 Bloomberg L.P.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.