After reporting much stronger than expected U.S. retail sales growth in the previous month, the Commerce Department released a report on Friday showing that retail sales were unexpectedly flat in the month of July.
The Commerce Department said retail sales were virtually unchanged in July after climbing by an upwardly revised 0.8 percent in June.
Economists had expected sales to rise by 0.4 percent compared to the 0.6 percent increase originally reported for the previous month.
The flat retail sales came despite a jump in sales by motor vehicle and parts dealers, which surged up by 1.1 percent in July after rising by 0.5 percent in June.
Excluding the spike in auto sales, retail sales fell by 0.3 percent in July after advancing by an upwardly revised 0.9 percent in June.
Ex-auto sales had been expected to rise by 0.2 percent compared to the 0.7 percent increase that had been reported for the previous month.
The drop in ex-auto sales was partly due to a 2.7 percent slump in sales by gas stations, which fell amid lower gasoline prices.
Sales by sporting goods, hobby, book and music stores also tumbled by 2.2 percent in July after jumping by 1.7 percent in June.
The report said closely watched core retail sales, which exclude autos, gasoline, building materials and food service, were unchanged in July following a 0.5 percent advance in June.
Paul Ashworth, Chief U.S. Economist at Capital Economics, said the flat core sales is genuinely disappointing but noted it follows a run of very strong gains between April and June.
"As things stand now, we still think that third-quarter GDP growth will be close to 3%, but driven by positive contributions from inventories and investment," Ashworth said.
He added, "We expect consumption growth to slow to nearer 3% in the third quarter, not least because real income growth has slowed sharply in recent quarters."
The Commerce Department noted that total retail sales in July were up by 2.3 percent compared to the same month a year ago, reflecting a notable slowdown from the 3.0 percent jump in June.
For comments and feedback contact: editorial@rttnews.com
Business News
April 24, 2026 15:15 ET Economics news flow was relatively light this week even as the conflict in the Middle East continued, raising concerns for policymakers. In the U.S., spending data, initial jobless claims and pending home sales were the highlights. Business confidence in the biggest euro area economy was in focus in Europe. Inflation data from Japan gained attention in Asia.