The U.S. retail sales report beat estimates
The U.S. retail sales report beat estimates with big July gains of 0.7% for the headline and 1.0% ex-autos, following small offsetting May and June revisions, leaving a solid trajectory for retail sales into Q3. Analysts saw a 1.8% July rise in service station sales thanks to a 2.5% CPI gasoline price rise, a 2.8% surge in non-store sales attributable to Amazon Prime day, and a 0.2% rise in building material sales as the series struggles to reverse Q2 weakness. Analysts saw a -0.6% drop in auto dealer sales that tracked a -1.8% vehicle sales drop. Analysts expect a smaller trimming in Q2 GDP growth to 1.9% (was 1.8%) from 2.1%, with a $6 B hike in consumption that accompanies a $2 B boost for nonresidential investment. Analysts expect downward revisions of -$4 B for inventories, -$4 B for exports, -$3 B for imports, -$8 B revision for public construction, -$2 B residential investment, and -$1 B for equipment spending. Analysts still expect Q3 GDP growth of 2.1%, with "real" consumption growth of a sturdy 3.1% (was 2.8%) after an estimated 4.5% (was 4.3%) pace in Q2. Analysts assume July personal consumption expenditures (PCE) gains of 0.5% for the nominal measure and 0.2% for the "real" gain. The business inventory report later this morning will reveal a 0.1% June sales gain after a -0.1% (was 0.2%) May figure. Today's retail sales data are consistent with a 0.5% business sales rise in next month's July report.