Retail sales account for a large part of consumer spending, which itself is typically the largest segment of GDP in an advanced economy. Changes in retail sales have a large effect on GDP growth rates and thus they are of great interest to economists, policy makers and financial markets.
Apart from a weak January, US retail sales have been robust from September 2017 onwards when annual growth rates started exceeding 5%. Since March, growth rates have picked up even further and the latest July figures suggest recent strength in consumer spending has continued into the September quarter.
According to the latest “advance” sales numbers released by the US Census Bureau, retail sales grew by 0.5% over the month and by 6.4% when compared with the same period last year. The increase was considerably higher than the 0.1% increase expected and up from June’s revised figure of +0.2%.
The increase was primarily driven by restaurants, bars and take-away sales, as well as online (“non-store”) retailing.