Retail Sales Fell in July, Highlighting a Rocky Economic Recovery

E-commerce

July’s spending numbers also likely reflected dampened e-commerce sales, because Amazon’s Prime Day promotions, which can drive online spending in the summer, took place in June this year instead of July. Credit card spending data declined 1.3 percent in July from June, a drop that analysts at Bank of America attributed last week to a fall in online spending.

Sales at nonstore retailers, which include e-commerce businesses, fell 3 percent in July, the Commerce Department said. Sales are shifting month to month as the economy’s unsteady reopening continues.

“It is possible that if the Covid surge continues and consumers remain cautious, we will see a rotation back from people spending outside to spending online,” said Joseph Song, a senior U.S. economist at Bank of America.

Restaurants and bars

Despite concerns that consumers are rethinking their return to in-person shopping and dining as cities and states are forced to slow reopening plans, sales of clothing and clothing accessories, as well as spending at restaurants and bars, were up about 3 percent.

“People are still going out and spending at bars and restaurants because it’s summer and you can sit outside. You feel safer outside,” Ms. Bovino said. “The big question is what is going to happen in September, when we have to go back indoors.”

What’s next?

Some retailers shrugged off the July sales report. Walmart, which said on Tuesday that revenue rose in the three months that ended in July, offered optimistic guidance, saying it expected U.S. sales to increase 5 to 6 percent for the year.

Analysts at Bank of America saw a pullback in travel spending in the first week of August, according to credit and debit card data, which they attribute to the rise in coronavirus cases. They expect e-commerce sales to rise again. “Spending at nonstore retailers should bounce, but services spending will be weaker,” they said in a note.

Ms. Bovino had a similar outlook, saying she expected a slowdown in sales in the fall. “We’ve been seeing a transition away from large durable-good items to consumer-facing services, but that could stall because of the virus,” she said.

Article source: https://www.nytimes.com/2021/08/17/business/economy/july-2021-retail-sales.html