Consumers in July cut back on discretionary spending, reflecting a trend that shows many are juggling their spending between goods and services, say analysts at NRF.
NRF retail sales in July, which exclude autos, restaurants and gas, were largely unchanged over June, increasing 0.1 percent; year-over-year unadjusted sales increased 4 percent. The Commerce Department said on Wednesday July retail sales, which had increased 0.2 percent in June, were flat over the previous month and up 3.7 percent unadjusted year-over-year. Much of the unexpected weakness came from a lack of spending in key areas such as furniture, home furnishing and electronics stores.
June and July’s combined year-over-year growth averages approximately 4 percent, which NRF’s Chief Economist Jack Kleinhenz believes is still on track to meet expectations of annual sales growth of at least 3.9 percent for the remainder of 2014.
“Overall, I still believe the economy and the consumer are headed in the right direction as consumer fundamentals such as positive income, employment and confidence remain relatively sturdy,” said Kleinhenz. “Retailers right now are witnessing a choppy pattern of spending, choosing between large ticket items and other discretionary purchases, with services they may need. Families today are still displaying behavior that shows they continue to struggle with purchase decisions, based on needs versus wants. It is also evident some consumers are cautious about leveraging up credit to support purchases.”
Sales in July were up against a strong showing in July 2013, making comparisons slightly more difficult. Specifically, electronics stores sales decreased 0.1 percent over June and increased 1.3 percent year-over-year; sales at apparel and accessory stores increased a solid 0.4 percent over June and 2.7 percent year-over-year. Health and personal care stores’ sales increased 0.4 percent seasonally adjusted over last month and a healthy 7.2 percent year-over-year, said NRF.