Retail Sales Drop; Markets Fear Economic Slowdown
US retail sales fell sharply in July, marking the largest decline in over a year. The value of retail sales dropped 0.6% month-on-month, significantly weaker than the market forecast of a 0.1% rise.
Pressure was also evident in core components. Retail sales excluding vehicles and gasoline fell 0.2%, whereas the market had anticipated a 0.3% increase. Meanwhile, "control group sales"—a metric used to gauge consumption for GDP calculations—fell 0.4%, contrasting with estimates of a 0.3% rise.
The weakness stemmed primarily from a decline in vehicle purchases and online store sales. The data indicates that US consumers are beginning to cut back on spending following a period of robust consumption throughout the first half of 2026.
Economists believe the earlier strength in consumption was bolstered by larger tax refunds early in the year. However, that boost was temporary, and the US personal savings rate had already fallen to a four-year low in June.
This data reinforces signals of an economic slowdown, following earlier reports of relatively softer CPI and PPI figures and signs of a weakening labor market. This combination could further reduce the urgency for the Federal Reserve to raise interest rates in the near term.
Newsmaker Analysis: Retail sales figures coming in well below expectations act as a negative factor for the US dollar and Treasury yields, as they reinforce expectations that the Fed will hold interest rates steady in September. Conversely, these conditions tend to support gold and silver. However, if the decline in consumption becomes too severe, stock markets may begin to view it as a signal of economic slowdown rather than merely positive news regarding interest rates. (arl)
Source: Newsmaker.id
