CIBC Research reviews today's US retail sales report for the month of July.

 

"Retail sales slid off in July. Total retail sales contracted 0.6% m/m, quite a bit below consensus expectation (0.1%). This was the biggest monthly decline in retail sales since May 2025. Year-over-year sales is still up 5%, although down from 6.8% in June. The monthly contraction was somewhat broad-based, led by a 2.2% contraction in nonstore retailers. This decline could  partly be related to a large online retailer moving their bi-annual sales from July to June. Other notable declines include motor vehicle and parts dealers, gasoline stations (due mostly to lower gasoline prices), electronics and grocery stores," CIBC notes.

 

"Partially offsetting these declines were clothing, health and personal care stores and building materials and supply dealers. The only services category, food services and drinking places, posted a steady 0.5% monthly gain, partly helped by the FIFA World Cup. The control group sales (ex. gasoline, restaurants, building materials, and autos) that feeds more directly into non-auto goods consumption in GDP also posted a 0.4% monthly contraction, much lower than consensus expectation (0.3%). This was the largest monthly contraction from the control group retail sales since January 2025, the large drop in online sales and MV and parts dealers were the main contributors to the drop. With easing wage growth and the effects of larger tax refunds this year waning, households are facing more of the pinch from inflation. This release suggests that consumption is slowing in the beginning of Q3," CIBC adds.