July year-over-year overall retail sales registered 8.6%. While month-over-month sales were unchanged in July, the details were far more encouraging, with a price-related fall in gasoline sales freeing up households to increase spending on other goods. With prices no longer rising rapidly, the increase in underlying retail sales is consistent with a rebound in real consumption at the beginning of the third quarter.
Last month’s decline in gasoline prices explains the 1.8% fall in gasoline station sales. Motor vehicle sales declined by 1.6%, but that won’t appear in the monthly consumption figures, which are based on the manufacturers’ unit sales numbers, which rose last month. Excluding gasoline and autos, sales rose by 0.7%, the same as in June, with the gain last month led by a 2.7% jump in non-store sales which more than offset small declines in department store and clothing sales.
Control group sales rose by a similar 0.8% in July and, with previous months’ estimates revised significantly higher, growth in underlying retail sales now appears to have been solid over the past six months.
U.S. housing starts fall in July to lowest level since early 2021
Construction on new U.S. homes fell a seasonally adjusted 9.6% in July to 1.45 million, the lowest level of starts in July since February 2021.
Building permits for new homes fell 1.3% to 1.67 million in July.
Starts for housing projects with five units or more declined 10% to a rate of 514,000 units. However, permits increased 2.5% to a rate of 693,000 units.
U.S. industrial output up sharply in July
U.S. industrial production rose 0.6% in July, the Federal Reserve reported. The gain was above Wall Street expectations of a 0.3% increase, according to a survey by The Wall Street Journal.
Capacity utilization rebounded to 80.3% in July from 79.9% in the prior month. The capacity utilization rate reflects the limits to operating the nation’s factories, mines and utilities.
Output of the U.S. industrial sector was at an all-time high, eclipsing the level hit in 2018.
Although manufacturing rose 0.7% in July after falling in the prior two months, surveys of manufacturers show growing concern about the sector going forward.