Retail sales in the U.S. rose for the fourth consecutive month in July, according to a report released by the Commerce Department on Tuesday, although the sales growth was slightly weaker than expected due to a notable drop in auto sales.
The report said retail sales edged up by 0.2 percent in July following an upwardly revised 0.6 percent increase in June.
Economists had expected sales to rise by 0.3 percent compared to the 0.4 percent increase originally reported for the previous month.
While sales rose less than expected, James Knightley, senior economist at ING, said, "This is the fourth consecutive monthly rise and suggests that U.S. consumers are overcoming the headwind from fiscal tightening earlier in the year."
A 1.0 percent drop in sales by motor vehicle and parts dealers limited the upside for overall retail sales, although the decrease in auto sales came on the heels of three consecutive notable increases.
Excluding the drop in auto sales, retail sales rose by 0.5 percent in July compared to a 0.1 percent increase in June. The increase in ex-auto sales exceeded economist estimates for 0.4 percent growth.
The report showed notable increases in sales by sporting goods, hobby, book and music stores, clothing and clothing accessories stores, and gas stations.
On the other hand, sales by furniture and home furnishing stores tumbled by 1.4 percent and sales by building materials and supplies dealers fell by 0.4 percent.
Core retail sales, which exclude auto, gasoline, and building materials sales, rose by 0.5 percent in July following a 0.2 percent increase in June. The increase in core sales is the fastest since a matching increase in December.
Peter Boockvar, chief market analyst at the Lindsey Group, said, "Bottom line, after a 1.8% rise in Q1 and 2.3% gain in Q2, personal consumption within GDP is expected to be up 2.2% in Q3 and today's retail sales figure (while only one month) likely confirms that for now."
"It also therefore doesn't move the needle for what the Fed plans on doing in September anyway which is likely taper," he added.
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