U.S. retail sales grew by 2.7% year-over-year

In July 2024, U.S. retail sales grew by 2.7% year-over-year (YoY), the fastest pace in three months, up from 2.0% YoY in June 2024. This growth was driven by a rebound in sales at motor vehicle and parts dealers, which rose by 0.8% YoY after a decline of 3.4% YoY in June.

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“Non-store retailers saw a slower increase of 6.7% YoY, down from 8.8% YoY in June, while food services and drinking places also experienced a softer expansion of 3.4% YoY compared to 4.0% YoY in the previous month.

US retail sales

“On the other hand, food and beverage stores registered their strongest sales growth in 15 months, rising by 2.9% YoY, up from 2.2% YoY in June. Gasoline stations had milder growth, with sales up 0.5% YoY, the slowest pace in a four-month growth streak,” says MIDF.

On a month-over-month (MoM) basis, retail trade surged by 1.0%, the steepest rise since January 2023, and exceeded market expectations of a 0.3% increase. However, U.S. industrial production fell by 0.2% YoY in July, marking the first decline in three months, with manufacturing output growth slowing to 0.1% YoY from 0.6% YoY in June. Industrial production also declined by 0.3% MoM, slightly more than the expected 0.2% drop.

The job market remained resilient, as initial jobless claims for the week ending August 10th, 2024, fell to 227,000, the lowest in five weeks, against expectations of a slight increase to 235,000. Despite concerns over industrial production, the continued growth in retail sales and lower jobless claims reduce recession risks. While the Fed may start easing its policy interest rate as early as September 2024 due to moderating inflation, the strength of the economy and job market suggests that large rate cuts are less likely.