Retail sales up 2.7% in July from a year ago

The National Retail Federation reported retail sales rose 2.7% in July from a year ago. Sales were 1.2% better than June but economists worry about declining sales beginning in August because Congress did not extend expanded unemployment benefits.

The NRF, citing U.S. Census Bureau figures, said the July advance follows an 8.4% month-over-month increase in June. Retail sales have been climbing after a record monthly drop in April when most U.S. stores deemed non-essential remained closed.

Roughly half of the retail categories as established by the Census Bureau saw month-over-month gains in July and most saw year-over-year increases, with the biggest monthly gain coming at electronics and appliance stores as consumers bought home computers in addition to sprucing up their homes with new furniture and appliances.

“Retail sales for July were another positive step in the right direction as our economy continues to slowly reopen,” said NRF CEO Matthew Shay. “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. “We encourage Congress and elected leaders at all levels of government to enact policies that support consumers and keep the economy open.”

Shay said retailers 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.

Census Bureau reports online sales rose 25.8% in July from a year ago, while seasonally adjusted sales were up 0.7% from the prior month. While Walmart does not break out monthly sales the retail giant did report a 97% gain in online sales for its second fiscal quarter with strong sales across all categories. Walmart did say home furnishings and sporting goods sales rose sharply in the quarter ending July 31. Walmart estimates 25 million people were fishing prior to COVID-19 and that number is now more than 35 million which has put pressure on suppliers and retailers to keep inventories stocked.

Census Bureau reports online sales rose 25.8% from a year ago, and they were 0.7% higher than last month on a seasonally adjusted basis. Sales for apparel and clothing-accessory stores increased by 5.7% compared to June sales, but were down 19.6% from July 2019. General merchandise stores saw sales rise 3.1% year-over-year while they were flat from the prior month. Grocery and beverage stores sales were up 12.8% year-over-year and 0.2% higher month-over-month seasonally adjusted.

As stimulus money got into consumers’ hands electronics and appliance stores saw a 2.3% uptick in sales from a year ago. Best Buy, the electronics and appliance store giant, reported its best second-quarter results in two decades on Tuesday. Home furnishing stores saw July sales up 0.5% from a year ago but were flat against June levels.

Sporting Goods stores sales rose 18.2% in July compared a year ago but they were down 4.9% from June on an adjusted basis. Building materials and gardening center stores rose 15.9% in July from last year, but they fell 2.9% from June when seasonally adjusted. Health and personal care stores including pharmacies sale sales rise 3.1% in July compared to a year ago. Sales were up 3.6% on an adjusted basis from June.

“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. 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,” said Jack Kleinhenz, NRF chief economist.