Retail Sales Rise Above Their Year-Ago Pace: August 10 – 14

Retail sales and manufacturing swelled in July…but so had prices. Here are the five things we learned from U.S. economic data released during the week ending August 14.


Retail sales rose above year-ago levels in July. The Census Bureau estimates retail and food services sales grew 1.2 percent during the month to a seasonally adjusted $536.0 billion. After three consecutive monthly gains, retail sales landed 2.7 percent ahead of where they were a year earlier. (Reflecting the damage inflicted this past spring: retail sales over the first seven months of 2020 were 2.1 percent below that of the comparable months in 2019.) Sales increased despite a decline at car dealers/parts stores of 1.2 percent. Net of automobiles/parts stores and gas stations (+6.2 percent), core retail sales swelled 1.5 percent in July and were 3.9 percent above year-ago levels. (The seven-month comparable was 0.2 percent ahead of that from 2019.) Sales soared at retailers focused on electronics/appliances (+22.9 percent), apparel (+5.7 percent), health/personal care (+3.6 percent), and groceries (+0.4 percent). Restaurants/bars also reported a 5.0 percent improvement in sales. Sales declined at sporting goods/hobby stores (-5.0 percent) and building materials retailers (-2.9 percent). Nonstore retailers (web-based) enjoyed a 0.7 percent gain in sales in July and were up 24.7 percent versus the same month in 2019.

Consumer prices rose in July. The Consumer Price Index (CPI) grew at a seasonally adjusted 0.6 percent rate during the month, matching the Bureau of Labor Statistics measure’s June reading. Food prices declined for the first time since April 2019 (-0.4 percent), while energy prices rose 2.5 percent (gasoline CPI: +5.6 percent). Net of food and energy, core CPI jumped 0.6 percent after advancing 0.2 percent in June. Rising were prices for transportation services (+3.6 percent), used cars/trucks (+2.3 percent), apparel (+1.1 percent), new vehicles (+0.8 percent), medical care services (+0.5 percent), and shelter (+0.2 percent). CPI has risen 1.0 percent over the past year, while core CPI advanced 1.6 percent over the same 12 months.

…as had wholesale prices. The final demand Producer Price Index (PPI) increased a seasonally adjusted 0.6 percent in July after having declined 0.2 percent during the prior month. The Bureau of Labor Statistics’ core wholesale price measure (net of energy, food, and trade services) grew 0.3 percent. Wholesale goods prices gained 0.8 percent, led by a 5.3 percent jump for energy goods (gasoline: +10.1 percent). Wholesale food prices slipped 0.5 percent (meat: -8.0 percent). Services PPI swelled 0.5 percent. PPI was 0.4 percent under year-ago levels, while core PPI has a very modest 12-month comparable of +0.1 percent.

Manufacturing output surged for a third straight month in July. The Federal Reserve reports manufacturing output jumped a seasonally adjusted 3.4 percent during the month, following gains of 7.4 percent and 3.8 percent in June and May, respectively. Durable manufacturing goods production rose 5.5 percent, boosted by automobile and aerospace.  Nondurable manufacturing increased 1.3 percent, with substantial advances for textiles, printing, and petroleum/coal products. Overall industrial production increased 3.0 percent, following 5.7 percent and 0.9 percent gains in June and May, respectively. Mining output grew 0.8 percent even as oil/gas well drilling slowed further (down 71.5 percent from a year earlier). Utility output climbed 3.3 percent in response to warm summer weather.  Even with the recent improvements, manufacturing output remained 7.7 percent behind its year-ago pace while overall industrial production has a 12-month comparable of -8.2 percent.

Hiring slowed down in June even as the count of open jobs expanded. The Bureau of Labor Statistics estimates that there were a seasonally adjusted 5.899 million open jobs on the final day of June, up 518,000 from May but still 18.0 percent below year-ago levels. Nearly half of the increase came from leisure/hospitality. Hiring slowed 7.0 percent during the month to 6.696 million, which was nevertheless 16.3 percent above year-ago levels. 4.758 million people left their jobs in June, up 522,000 for the month but 14.5 percent below year-ago levels. Layoffs slipped by 18,000 during the month to 1.885 million (+6.9 percent vs. June 2019), while voluntary quits jumped by 531,000 to 2.598 million (-25.4 percent vs. June 2019).

Other U.S. economic data released over the past week:

  • Jobless Claims (Week ending August 8, First-Time Claims, seasonally adjusted): 963,000 (-228,000 vs. the previous week, +745,000 vs. the same week a year earlier). 4-week moving average: 1,252,750 (+483.4% vs. the same week a year earlier).
  • University of Michigan Surveys of Consumers (August 2020-preliminary, Index (1966Q1=100, seasonally adjusted): 72.8 (vs. July 2020=72.5, August 2019=89.9).
  • Import Prices (July 2020, All Goods): +0.7% vs. June 2020, -3.3% vs. July 2019. Nonfuel Imports: +0.8% vs. June 2020, Unchanged vs. July 2019.
  • Export Prices (July 2020, All Goods): +0.8% vs. June 2020, -4.4% vs. July 2010. Nonagricultural Exports: +0.7% vs. June 2020, -4.6% vs. July 2019.
  • Productivity (2020 Q1-preliminary, Nonfarm Labor Productivity, seasonally adjusted annualized rate): +7.3% vs. 2019 Q4, +2.2% vs. 2019 Q1.
  • Small Business Optimism Index (July 2020, Index (1986=100, seasonally adjusted): 98.8 (vs. June 2020=100.6, July 2019=104.7).
  • Business Inventories (June 2020, Manufacturers’ and Trade Inventories, seasonally adjusted): $1.912 trillion (-1.1% vs. May 2020, -5.8% vs. June 2019).
  • Treasury Budget (July 2020, Federal Budget Deficit for 1st 10 Months of FY2020): -$2.807 trillion (vs. 1st 10 Months of FY2019: -$866.8 billion).

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

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