The Commerce Department reported Thursday that consumer spending performed even better than expected in July as inflationary pressures showed more signs of easing.
Senior retail sales Growth for the month was 1%, based on data adjusted for seasonality rather than inflation. Economists surveyed by Dow Jones had expected growth of 0.3%. June sales were initially reported to be flat before being revised to a 0.2% decline.
Excluding auto-related items, sales grew 0.4%, also better than the 0.1% forecast.
There is also good news on the labor market: First time filing for unemployment benefits The total number for the week ended August 10 was 227,000, down 7,000 from the previous week and below expectations of 235,000.
Sales growth was driven by growth at car and parts dealers (3.6%), electronics and appliance stores (1.6%) and food and beverage stores (0.9%). Revenues at miscellaneous retailers fell 2.5%, while revenue at gas stations rose just 0.1% and revenue at clothing stores fell 0.1%.
stock market futures U.S. Treasury yields rose sharply after the data was released Thursday morning, while Treasury yields also soared.
“This is yet another proof that the U.S. consumer is still capable of surprises,” William Blair macro analyst Richard DeChazal wrote. “This is another solid report that is inconsistent with a consumer on the verge of collapse.”
The report was released the same week as data showed inflation slowed slightly in July.
Prices paid by consumers for goods and services rose 0.2% month-on-month, and the annual inflation rate fell to 2.9%, the lowest level since March 2021. Year.
Although inflation data remains above the Fed’s 2% target, the data shows that price pressures that peaked two years ago continue to ease.
Separate data released Thursday contradicted that, the Labor Department said. Import prices rose 0.1% The forecast for July is slightly ahead of schedule and unchanged. Import prices increased by 1.6% annually, the largest increase since December 2022.
Financial markets expect the Fed to respond with its first rate cut in more than four years when it next meets in September, although consumer resilience may give policymakers more reason to take a cautious approach to rate cuts.
Echoing the theme of stable consumption, Walmart early thursday Reports strong earnings Although it issued some warnings about the second half of 2024, it still raised sales and expectations for the previous quarter.
In addition to seeking lower interest rates, investors are increasingly expecting the Fed to shift its focus away from a laser-like focus on inflation and toward a broader focus on potential weakness in the labor market and elsewhere.
The U.S. Department of Labor’s unemployment claims data also showed that the number of people continuing to apply for unemployment benefits dropped slightly from a week later to 1.864 million. A weaker-than-expected jobs report for July stoked concerns about possible weakness in the labor market.
Other economic data released on Thursday showed that manufacturing conditions are wavering.
New York Fed Empire State Building Manufacturing This indicator edged higher but remained in negative territory at -4.7, slightly better than expectations of -6. at the same time, Federal Reserve Bank of Philadelphia Manufacturing The indicator slipped to -7, its first negative reading since January and well below the forecast of 7.9.
Both indexes measure the percentage of companies reporting expansion versus contraction.
