Thanks to major downward revisions (Control Group saw a 0.1% drop in June after revisions), headline July retail sales beat expectations rising 0.5% MoM as clothing, food service, and gas station sales jumped.
While the revisions helped, as Bloomberg notes, the data suggest consumer spending is continuing to drive the economy early in the quarter. Tax cuts have put more money in Americans’ pockets this year, consumer sentiment remains elevated and a gauge of small-business optimism rose in July to the second-highest level on record.
The report showed so-called retail control-group sales — which are used to calculate gross domestic product and exclude food services, auto dealers, building-materials stores and gasoline stations — rose 0.5 percent, slightly more than forecast, after a 0.1 percent drop in the prior month.
Nine of 13 major retail categories showed increases, according to the Commerce Department data.
Under the covers: food service and drinking places, gasoline stations, and clothing sales surged; while sporting goods and furniture sales slumped…
Interestingly, retail sales data shows purchases at motor-vehicle and parts dealers rose 0.2% after increasing 0.1% in the previous month, which stands in defiance of other data earlier this month showed the volume of U.S. auto sales fell 4% from June.
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Author: Tyler Durden