U.S. retail sales powered higher last month as higher gas prices and a boost from Amazon's Prime Day event underscored the ongoing strength of the domestic consumer.
July retail sales rose 0.7% to a collective $696.4 billion, the Commerce Department said on Tuesday, nearly double the Wall Street consensus forecast of a 0.4% gain. The figure is not adjusted for inflation, and includes overall sales of gasoline and other goods that have been volatile in recent months.
The June total was revised to a gain of 0.3% from the original estimate of a 0.2% month-on-month advance, the report also indicated. Stripping out the auto sector, July retail sales were up 1%, the report noted.
Stand-alone sales of gasoline were up 0.4% as prices rose to $3.712 a gallon on average over month, according to data from the U.S. Energy Information Administration. That compares to an average of $3.684 per gallon in June.
The closely tracked control group number, which excludes autos, building materials, office suppliers, gas station sales and tobacco and feeds into the government's GDP calculations, rose 1%, firmly ahead of analysts' estimates of a 0.2% gain.
Inflationary pressures picked up modestly in July, according to data from the Bureau of Labor Statistics last week, with the headline consumer price index rising to 3.2% from a two-year low of 3% in June.
"The better-than-expected retail sales growth in July is another sign that the economy continues to grow at an impressive pace," said Sam Millette, fixed income strategist for Commonwealth Financial Network in Waltham, Mass.
"Consumer spending has remained resilient throughout the year and helped fuel the solid economic growth that we saw in the first half," he added. "The continued strength of the consumer to start the second half of the year is a good sign for the health of the economy and a recession remains unlikely as long as consumers keep spending."
U.S. stocks were firmly lower following the data release, with the Dow Jones Industrial Average falling 295 points in the opening hour of trading while the S&P 500 was down 38 points.
Benchmark 10-year Treasury note yields rose 5 basis points to 4.274% following the data release while the dollar index was marked 0.05% higher on the session at 103.245 against a basket of six global currencies. Benchmark 2-year note yields moved past the 5% mark to 5.01%
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