July retail sales surpassed Wall Street estimates in the latest sign that a resilient US consumer continues to surprise to the upside.
Retail sales rose 0.7% in July from the previous month, more than Wall Street's estimates for 0.4% growth. Sales excluding auto and gas increased by 1.0%, well above estimates for 0.3% compiled by Bloomberg. Meanwhile, June sales were revised up to 0.3% from 0.2%.
The report, released by the Commerce Department, offers a snapshot of consumer spending at a time when economic data has been coming in stronger than expected and has economists pushing back or eliminating their recession calls. Spending in the Commerce Department's control group, which feeds directly into the Gross Domestic Product (GDP) report, increased 1.0% in July. Economists expected just a 0.5% rise.
"One number by itself is not a lot but I think this number in addition to so many other stronger than expected data points that we have seen just shows that the US economy is in a very strong place and consumers are doing really well despite the (interest) rate rises," BlackRock head of iShares investment strategy Gargi Chaudhuri told Yahoo Finance Live.
Nine of the 13 categories highlighted in the release saw increases from a month ago. Nonstore retailers, which includes e-commerce, increased 1.9% from June. Amazon (AMZN) Prime Day and other online sales occurred in July.
Meanwhile, sales in sporting goods and hobbies rose 1.5% from June, while food services and drinking places gained 1.4%.
On the flip side, sales for furniture and home furniture stores declined by 1.8%, and electronics and appliance store sales dropped by 1.3%.
"Spending on expensive, interest rate-sensitive items such as motor vehicles and furniture weakened, but these losses were more than offset by gains in the other components," Oren Klachkin, Oxford Economics lead US economist, wrote in a note on Tuesday. "Leisure and hospitality spending stayed on a positive trajectory as outlays at food services and drinking places notched another a solid increase."
Tuesday's report was one of several key readings on the consumer that was expected this week as big box retailers report second quarter results. On Tuesday morning, Home Depot once again warned of a slowdown in big-ticket spending from its customers.
"While there was strength in categories associated with smaller projects, we did see continued pressure in certain big-ticket, discretionary categories," Home Depot CEO Ted Decker said in the company's earnings release.
Target (TGT), Walmart (WMT), TJX Companies (TJX), Ross Stores (ROST), and Deere & Co. (DE) are also expected to report this week.
Josh Schafer is a reporter for Yahoo Finance.
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