The Census Bureau reported mixed news on retail sales, which increased 0.2 percent in July, slightly below expectations. Year-over-year growth in retail sales was 5.4 percent, just below last month’s 5.9 percent pace. This still indicates decent growth overall. Yet, the slower rate could mainly be explained by reduced purchases in the motor vehicle and parts segment, down 1.0 percent for the month. To be fair, July’s slower auto sales are hopefully just a respite from a much more torrid pace over the past couple years, which have experienced retail sales growth of 11.8 percent and 18.7 percent over the past 12 and 24 months, respectively.

If you omit motor vehicles from the analysis, retail sales would have risen 0.5 percent, the fastest rate since February. This also suggest a pickup in the broader spending data, with retail sales excluding autos and gasoline unchanged in June’s report. Higher gasoline prices played less of a role in July, with retail sales excluding autos and gasoline still up 0.4 percent.

In July, retail spending was mostly higher across-the-board outside of autos, with the largest gains in the following types of stores: clothing and accessories (up 1.0 percent), sporting goods and hobbies (up 1.0 percent), gasoline stations (up 0.9 percent), food and groceries (up 0.8 percent), health and personal care (up 0.7 percent), department stores (up 0.6 percent), and restaurants and bars (up 0.6 percent).

Segments with lower sales included furniture and home furnishings (down 1.4 percent), building materials (down 0.4 percent), and electronics and appliances (down 0.1 percent).

Overall, the retail sales report suggests that consumer purchases were higher, but with Americans somewhat cautious in their spending. The good news is that sales in a broad segment of categories were higher, with pent-up demand lifting growth in spending.

At the same time, it is perhaps notable that businesses which were more interest rate sensitive were the ones with slight pullbacks in July. This included reduced sales in autos, home improvement, home furnishings, and electronics. One should not over-read this, as year-over-year sales growth in these businesses has mostly been stellar. But, with increased interest rates, we should probably not be surprised to see some modest signs of easing, particularly in the residential sector. We will get a better sense of this on Friday with the release of new housing starts data.

Chad Moutray is the chief economist, National Association of Manufacturers.

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