U.S.: Consumption, manufacturing firm; prices soft

5 min

Retail sales rose +0.1% m/m, but an upward revision to June kept the y/y rate at a strong +6.6%. Restaurant sales rose for the fourth straight month to +10.1% y/y, a good sign of discretionary spending. Gasoline sales rose to +20.3% y/y, but autos fell for the third straight month to +4.0% y/y. The core rate is still strong at +5.2% y/y. Similar patterns emerged in consumer prices, which despite a +20.3% y/y gain in gasoline, fell from +2.9% y/y to +2.7%. The decline was led by weak auto sales of +0.3% y/y, declines in medical care and the fourth straight drop in apparel prices; core prices fell from +2.4% y/y to +2.2%. Producer prices were driven down by trade services to +2.8% y/y from +3.3% despite price increases from tariffs; core prices fell to +2.3% y/y from +2.7%. Manufacturing industrial production rose to +3.6% y/y, the highest in over six years, but a separate report showed homebuilder sentiment at the lowest in a year.