U.S Retailers Post their Strongest Sales Growth for 2017

U.S retailers posted their strongest sales growth all year in July. Sales at retailers and restaurants jumped +0.6% from a month earlier, the biggest increase in eight months.

Ex-autos, retail sales rose +0.5% m/m. The market had been expecting a +0.4% jump in both categories.

Today’s report emphasizes financial stability and rising confidence of the U.S consumer, who are benefiting from a number of factors – a prosperous stock market, low inflation, strong job growth and slow-but-steady wage gains.

Digging deeper, Internet sales drove last month’s increase, with spending at non-store retailers growing +1.3% (up +11.5% y/y) the most since last December.

Note: Amazon’s Prime Day, a popular day of discounts at the site was a big supporter.

Car sales jumped +1.2%, as did spending on building materials and garden equipment. Sales at furniture outlets, grocery stores, restaurants and department stores all rose healthily.

In contrast, spending on gasoline, electronics and clothing all fell. Overall retail sales have climbed +4.2% over the past year.

Other U.S data showed that weak import prices point to persistently low inflation

The U.S inflation picture does not look much stronger after today’s report on import prices.

Import prices climbed +0.1% in July m/m and it was entirely due to higher fuel prices.

Prices for non-fuel imports fell -0.1%, dropping for the first time in seven months and matching the biggest drop in 13-months.

Today’s report is the latest to show that U.S inflation pressures remain subdued, having weakened from earlier in the year.

Don’t expect the odds for a Fed Dec. hike to tighten that much after this morning’s print – current odds heading into this morning’s reports were +42% for a Dec. hike.

USD finds a bid against G7 pairs (€1.1704, £1.2855, ¥110.75 and C$1.2788). U.S treasuries extend todays losses, backing up a further +2 bps to +2.275%.

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