U.S. retail sales growth exceeded market expectations in July in a sign of consumer optimism despite ongoing trade tensions and investor fears of a potential economic downturn.
The U.S. Census Bureau reported that retail and food services sales rose at a seasonally adjusted monthly rate of 0.7% in July, reflecting broad-based gains and beating the consensus forecast of 0.3% growth from economists polled by Econoday. The sales growth reading for June was revised down to 0.3% from 0.4%.
Excluding motor vehicle and parts and gasoline stations, sales rose 0.9% month over month in July.
"Despite the doom and gloom in the news headlines about an upcoming recession, the U.S. consumer remains alive and well," analysts at Foresters Asset Management said in a note.
However, consumer spending remains at risk due to the lingering threat of more U.S. tariffs on Chinese goods and China's possible retaliation, analysts also warned.
"[W]hile the delay of tariffs on about $155 billion of Chinese imports means consumers may not feel it in their wallets until after the holiday season, if confidence is hit, it may curtail spending sooner," economists at Wells Fargo Securities said.
In July, 10 of 13 retail business categories recorded monthly growth in sales, with nonstore retailers and gasoline stations posting gains of 2.8% and 1.8%, respectively.
Compared with the same month in 2018, total retail and food services sales were up by 3.4% in July.