U.S. retail sales are missing expectations in July, may be even slower in months ahead

WASHINGTON (Reuters) – U.S. retail sales increased less than expected in July as consumers cut back on motorcycle purchases and could move too slowly in the months ahead amid emerging new COVID-19 infections and a reduction in unemployment benefit checks .

However, the Department of Commerce’s report on Friday did not change expectations that consumer spending will rebound this quarter after a record fall in the second quarter.

Retail sales rose 1.2% last month after rising 8.4% in June. Economists surveyed by Reuters had predicted that retail sales would rise 1.9% in July.

Retail sales were restored when companies resumed operations after closing in mid-March in an effort to slow the spread of respiratory disease. Coronavirus infections continue to spread across the United States, forcing authorities to shut down or pause companies in some of the hot spots.

The respiratory disease caused by the virus has frightened consumers to visit places such as restaurants and shopping malls, and cut back.

The delay in retail sales in July was led by a 1.2% increase in receipts at car dealerships. That followed a 6.1% acceleration in June. Consumers are also reducing spending at hobby, musical instrument and bookstores, as well as at building materials stores. But they increased purchases at electronics and appliance stores, which rose by 22.9%, which probably reflects strong demand, as many Americans work from home.

Receipts at restaurants and bars increased 5.0%, although the rate dropped from the 26.7% notch in June. Online and mail order retail sales rebound 0.7%. The sale of furniture stores was flat. Receipts at clothing stores grew 5.7%.

Excluding cars, petrol, building materials and food services, retail sales increased 1.4% in July after increasing 6.0% in June. These so-called core sales correspond most closely to the consumer expenditure component of the gross domestic product report.

Consumer spending fell at an annual rate of 34.6% in the second quarter. As a result, GDP fell at a rate of 32.9% over the past four years, the deepest decline in exports since the government began in 1947.

The dollar traded lower against a currency exchange rate, while US Treasury prices were higher. Shares on Wall Street open army.

Retail sales could lose further momentum as tens of millions of unemployed people lost a $ 600 weekly unemployment benefit at the end of July, which had 20% of personal income, and helped buy food and pay for it. rack. President Donald Trump on Saturday signed a number of executive orders, including one that extended the supplement, although he reduced the weekly payout to $ 400.

But states, which are required to cover $ 100 of the benefits under the order, are even under enormous financial pressure caused by the pandemic. The remaining $ 300 will be funded from a limited emergency relief program, which economists estimate will be phased out in early September.

Economists saw little impetus for spending on other executive orders that halted the collection of payroll taxes for a group of workers, halting evictions of renters who have federal financial support and extending 0% interest on federally funded student loans.

Republicans and Democrats are fighting over new aid to the economy, even as signs report that activity is stalling. About 28.3 million people are on unemployment benefits.