As reported by Reuters, the current United States retail sales were unexpectedly flat in July as Americans cut back on purchases of clothing and other goods, pointing to a moderation in consumer spending that could temper expectations of an acceleration in economic growth in the third quarter.
Other data on Friday showed producer prices recorded their biggest drop in nearly a year in July amid declining costs for services and energy goods. Cooling consumer spending and tame inflation suggest the Federal Reserve will probably not raise interest rates anytime soon despite a robust labor market.
“The Fed has a consumer demand-centric view of economic activity and this report is one more hurdle to a rate hike in September,” said John Ryding, chief economist at RDQ Economics in New York.
July’s unchanged retail sales reading followed an upwardly revised 0.8 percent increase in June, the Commerce Department said. Retail sales in June were previously reported to have increased 0.6 percent. Sales rose 2.3 percent from a year ago.
Excluding automobiles, gasoline, building materials and food services, retail sales were also unchanged last month after rising 0.5 percent in June.
These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. Economists had forecast overall retail sales rising 0.4 percent and core sales climbing 0.3 percent last month.
U.S. Treasuries were trading higher, while the dollar fell against a basket of currencies. Wall Street stocks were lower after the weaker-than-expected data.