Sales up again in July, but growth is slowing
For the second month in a row, retail sales nationwide saw an increase over the previous month. The 1.2% month-to-month sales increase reported in July by the Census Bureau brought total sales to $536 billion — a return to levels seen before the onset of the COVID-19 pandemic in the United States. The results have industry leaders cautiously optimistic about the coming months.
“Americans are showing their continued resilience and willingness to spend in the face of this unprecedented pandemic and government actions to date have clearly supported consumers and the economy in this process,” said Matthew Shay, president and CEO of the National Retail Federation. “Retailers all across the country have demonstrated that their stores and supply chains can be operated safely and effectively for associates and their customers by following established guidelines and protocols.”
In addition to the Census Bureau figures, NRF said that by its calculations, which exclude auto dealers, gas stations and restaurants, sales were up 1% seasonally and 10% year-over-year on an unadjusted basis. On a three-month moving average, NRF’s numbers have retail up 7.1% year over year.
The biggest beneficiaries of the increased spending were electronics and appliance retailers, which saw sales up 22.9% month over month seasonally adjusted, but still down 2.3% adjusted year over year. Health and personal care stores saw sales up 3.6% unadjusted month over month and up 3.1% adjusted year over year.
The sales increase is a marked improvement from the decline in sales that accompanied the pandemic in March and April. However, growth has slowed from an 18.3% increase in May to 8.4% in June. This slowdown underscores that things may be improving, but that the economy is not out of the woods yet.
"Retail sales are starting the third quarter on a solid footing considering the nosedive we saw this spring, but we have to remember that there’s uncertainty about economic policy and that the resurgence of the virus is putting pressure on the fledgling recovery,” said Jack Kleinhenz, NRF’s chief economist. “While households are spending, they are anxious about their health and economic well-being, so they are being pragmatic. The amount of uncertainty about forecasting is huge as we look toward the second half of the year, and what happens with the economy comes down to what the coronavirus allows us to do.”
The slowdown in July came before expanded unemployment benefits expired at the end of last month. Though President Donald Trump signed an executive order restoring $400 per month of the $600 increased benefits included in the CARES Act, it includes $100 from the states, which could have an impact on spending in August.