Retail sales fell 0.6% in July

American consumers, who have driven the economy forward this year, took a breather in July. Retail sales fell 0.6% in July, which is the weakest performance in more than a year and below the expected 0.1% gain. Excluding gas stations and auto dealers, sales still declined by 0.3%, indicating that the weakness was evident even apart from those volatile categories.

Auto dealers' sales were down 2%, gasoline stations' sales fell 0.9%, and electronic and appliance store sales declined 0.5%. Some one-off shifts, such as Amazon's Prime Day discounting event being held earlier this year, contributed to the decline. The numbers were soft even accounting for these factors, giving some pause as to how robust consumer spending will be in the second half of the year.

The retail sales control group that feeds directly into GDP calculations fell 0.4% in July, versus a 0.3% gain that analysts forecast. Previously reported gains for May and June were also revised downward. Despite the decline, the stock market is booming, gasoline prices are well off their recent highs, and the unemployment rate is low, suggesting no reason to expect a meaningful pullback in broader consumer spending.