U.S retail sales declined in July amid delta variant concerns

Retail sales in the United States declined more than expected in July as concerns over the delta variant of Covid-19 slowed economic activity and automobile sales dropped.

Retail sales decreased 1.1 % for the month, above the Dow Jones forecast a 0.3 % drop.

Sales fell 0.4 % excluding autos, according to Commerce Department statistics issued Tuesday.

The manufacture of automobiles has been hindered by a global scarcity of semiconductors. The paucity of chips has also hampered the supply of some home gadgets such as microwaves and refrigerators.

Earlier in the summer, retail sales increased rapidly as consumers shifted their spending away from products and toward services such as dining out and vacations. That change happened as more Americans were immunized and state and municipal governments lifted numerous Covid-19-related restrictions, some of which have since been reinstated in light of the recent increase in coronavirus infections, WSJ reported.

The majority of the monthly drop was accounted for by motor vehicle and parts dealers, which declined 3.9 %.

Clothing retailers were down 2.6 %, while sporting goods, musical instruments, and book stores were down 1.9 %. Online sales fell by 3.1 % as well.

Gasoline sales climbed 2.4 % as energy costs continued to rise, while the return of companies to bars and restaurants raised food and beverage sales by 1.7 %.

Retail sales dipped 1.0 % this month after rising 1.4 % in June, excluding vehicles, fuel, building materials, and food services. These so-called core retail sales are the most closely related to the consumer expenditure component of GDP.

In the second quarter, the economy increased at an annualized pace of 6.5 %. The Atlanta Federal Reserve now expects GDP to rise at a 6.0 % annual rate in the third quarter.