Among the key economic reports to be released next week in the US is July’s retail sales on Tuesady. Analysts at Wells Fargo, suspect sales growth slowed to around 0.1%. Market consensus points to a modest decline. Analysts will watch closely the upcoming US numbers after the sharp decline in Consumer Sentiment reported on Friday.
Key Quotes:
“Retail sales were generally expected to slow this summer after their rapid recovery, as consumers shifted more spending toward services and experiences and away from goods. Data for June pushed back at this, as sales rose 0.6%, beating expectations for a 0.3% decline. Rather than a turn back toward stay-at-home habits, the details of the report showed that people were getting back out, with sales at clothing stores, gas stations, restaurants and bars all contributing to the top-line beat.”
“Looking ahead to July, we suspect sales growth slowed to around 0.1%. The spread of the Delta variant has tempered hopes for a further reopening of the economy. We did not see a reversal in visits to retail and recreation locations or seated diners at restaurants as we had seen in prior waves, but there was a stall in the return to normal in July. While retail sales have done well in the face of prior COVID waves, it seems unlikely that consumers will feel compelled to splurge on additional durable goods and appliances as they did last year.”
“Durable goods by definition are meant to last, so the second appliance or recreational good may not be as helpful as the first. In addition, the run-up in goods prices over the past few months could lead to some sticker shock, making people more hesitant to spend. Over the next two months, however, the impact of the advance tax credit payments that went out in the middle of July as well as some much needed back-to-school shopping could offset some of these headwinds.”