Retail Sales Bounce Back, Doubling Median Forecast for July

Retail sales in the U.S. bounced back in July, increasing by 0.6 and doubling the median economic forecast calling for 0.3. The data, which surpassed even the high-end forecast of 0.5, is welcomed news.

U.S. retail sales have been one of the most negative indicators for gross domestic product (GDP) throughout the year. However, the report not only beat expectations but also includes sizable upward revisions.

June retail sales were revised 0.5% higher, moving the overall to 0.3% from an initial reported -0.2%. There were also upward revisions for May, as well, which moves it to unchanged juxtaposed to the -0.1% initial reading.

Nonstore retailers, vehicle dealers, building materials stores lead the report — all major categories. Secondary readings are all strong: up 0.5% ex-autos, up 0.5% ex-autos ex-gas, and up 0.6% for the control group.

While most readings of consumer spending were gaining steam, retail sales were lagging until now. Consumer spending is now positive and in line with full employment. Upward revisions to June and May will be net positives for second-quarter GDP revisions.