US: Weak start of Q3 for retail sales  - Wells Fargo

According to analysts from Wells Fargo, retail sales started the third quarter  weak, with a flat reading compared to June. “However, June’s already strong reading was revised up to 0.8 percent from 0.6 percent.”

Key Quotes:

“July retail sales were weak, posting a flat reading compared to June. Once again, the biggest negative in July was a 2.7 percent decline in gasoline station sales, more than reversing the 2.2 percent increase recorded in June.”

“However, that was not the only issue with retail sales during the month. Sporting goods, hobby, book and music store sales were down 2.2 percent, also more than reversing the 1.7 percent growth reported in June.”

“Control group sales disappointed in July by remaining flat after increasing 0.5 percent in June. Furthermore, May’s control group sales growth was revised down from an original print of 0.5 percent to 0.4 percent. Control group sales go directly into the calculation of GDP so it is an important indicator for what is happening to consumer demand. Still, the revisions are probably not going to affect personal consumption expenditures (PCE) in the second quarter but it is clear that the third quarter started on a weaker note. And this is not a small issue, as PCE has been the strongest growth sector for GDP.”