Market CommentariesRetail Sales Show No Change In July - August 13, 2014In a mildly disappointing report, the Commerce Department issued data showing that retail sales were unchanged in July. That compares with an expectation of a 0.2% increase. June's retail report, meantime, noted a gain of 0.2%. That data were not revised from that figure.

However, if we back out the auto component, a normally volatile category because of the high-ticket nature of that indicator, sales showed a nominal uptick of 0.1% last month. In June, sales ex autos, had risen by 0.4%. A similar result had been forecast for July. That metric, too, showed no revision from June. As for motor vehicles and parts sales, they eased by 0.2% last month; in June, they had fallen by 0.3%. All told, retail sales were up 3.7% from a year earlier.

Breaking the report down further, we find that nominal declines of 0.1% were posted last month in sales of furniture and home furnishings and in sales of electronics and appliances. Larger setbacks, meantime, were recorded in sales of general merchandise and in department stores. Interestingly, sales edged 0.1% lower, as well, over the Internet, following a 0.6% increase in June. In all, such sales were up 5.9% in the past year.

As to components showing gains last month, volume was higher at building and garden equipment retailers, at food and beverage outlets, at grocery stores, and health and personal care purveyors, and at clothing and accessories dealers.

Looking at this report in its entirety, it was mildly disappointing, being the weakest result in six months. Retail sales are a major portion of consumer spending, which is the dominant factor in U.S. economic activity, accounting for some two-thirds of aggregate economic volume. This report is not a game changer, and we still expect GDP to increase by better than 3% in the current quarter. Just as plainly, however, we do not expect a repeat of the outsized second-quarter gain of 4.0% in either the current quarter or the final stanza.