July retail sales show growth amid Back-to-School shopping and promotions

The National Retail Federation (NRF) this week released the CNBC/NRF Retail Monitor report, revealing a growth in retail sales for July 2024. The data, which was collected and analyzed in partnership with Affinity Solutions, showed an increase in consumer spending across various retail categories. This growth was primarily attributed to back-to-school shopping and special promotional events offered by retailers during the month.

According to the report, total retail sales, excluding automobiles and gasoline, saw a 0.74% increase when seasonally adjusted month-over-month. When compared to the same period last year, unadjusted sales rose by 0.92%. These figures represent a notable improvement from June's performance, which saw increases of 0.47% month-over-month and 3.42% year-over-year.

The Retail Monitor's calculation of core retail sales, which excludes restaurants in addition to automobiles and gasoline, painted an even more positive picture. Core sales experienced a 0.95% month-over-month increase in July and a 1.69% year-over-year growth. This growth outpaced June's figures, which stood at 0.3% month-over-month and 3.07% year-over-year.

NRF President and CEO Matthew Shay provided context for these numbers, stating that July's data reflects a broader economic trend where consumers, while remaining cautious, continue to spend on essentials when they perceive value. Shay highlighted the impact of back-to-school and back-to-college spending, which likely bolstered sales across various retail categories, from clothing and school supplies to computers and dorm room furnishings.

The retail landscape in July was characterized by a mix of economic factors. While labor market trends have shown signs of softening and interest rates remain high, the NRF noted that economic fundamentals remain intact. Notably, inflation for goods has fallen to nearly zero, although prices for services continue to be elevated. This complex economic backdrop underscores the resilience of consumer spending in the face of ongoing challenges.

One of the key drivers of July's sales growth was the occurrence of special promotion days held by some retailers. These events, which took place both in-store and online, have become a strategy for boosting summer sales in recent years. The success of these promotions in July 2024 demonstrates their continued effectiveness in stimulating consumer spending during traditionally slower retail periods.

Looking at the broader picture, the Retail Monitor reported that total sales for the first seven months of 2024 were up 2.1% year-over-year, with core sales showing a slightly stronger increase of 2.4%. These figures suggest a moderate but steady growth trajectory for the retail sector in 2024.

The CNBC/NRF Retail Monitor's methodology offers a unique perspective on retail performance. Unlike the survey-based numbers collected by the Census Bureau, this report utilizes actual, anonymized credit and debit card purchase data compiled by Affinity Solutions. This approach eliminates the need for monthly or annual revisions, providing a more immediate and accurate snapshot of retail activity.

Breaking down the performance by retail categories, the report revealed varied results across different sectors. Online and other non-store sales led the pack with a robust 18.45% year-over-year increase, reflecting the continued shift towards digital shopping channels. Health and personal care stores also performed strongly, with a 9.68% year-over-year growth, possibly indicating increased consumer focus on wellness and self-care products.

Clothing and accessories stores saw a notable 5.27% year-over-year increase, likely boosted by back-to-school shopping. Building and garden supply stores, general merchandise stores, and grocery and beverage stores all posted modest year-over-year gains, suggesting stable consumer demand across these essential retail categories.

However, not all sectors experienced growth. Electronics and appliance stores saw a slight decline of 1.97% year-over-year, while furniture and home furnishings stores faced a more significant drop of 4.79%. These declines might reflect shifting consumer priorities or the impact of inflationary pressures on discretionary spending for big-ticket items.

The performance of sporting goods, hobby, music, and book stores presented a mixed picture. While they saw a strong month-over-month increase of 2.09%, their year-over-year sales were down by 1.75%. This discrepancy could be attributed to seasonal factors or changing consumer leisure preferences.

The July retail sales data comes at a crucial time for the U.S. economy, as policymakers and analysts closely monitor consumer behavior for signs of economic resilience or weakness. Consumer spending, which accounts for roughly two-thirds of U.S. economic activity, plays a pivotal role in shaping the country's economic trajectory.

The retail sector's performance also has significant implications for employment. As the NRF points out, retail is the nation's largest private-sector employer, contributing $5.3 trillion to annual GDP and supporting more than one in four U.S. jobs – a total of 55 million working Americans. Therefore, the sector's ability to maintain growth amid economic challenges has broader implications for the overall job market and economic health.

It's worth noting that the retail landscape continues to evolve, with online sales playing an increasingly important role. The strong performance of the online and non-store sales category in July underscores this trend. Retailers who can effectively balance their brick-and-mortar presence with robust online offerings are likely to be better positioned in this changing environment.

The back-to-school shopping season, which typically runs from July through early September, is a critical period for many retailers. The strong performance in July suggests that consumers are still prioritizing these essential purchases, even in the face of economic uncertainties. This behavior could be seen as a positive indicator of consumer confidence and willingness to spend on necessary items.

As the retail sector moves into the latter half of 2024, all eyes will be on whether this growth momentum can be maintained. The upcoming holiday shopping season, traditionally the most important period for retailers, will be particularly crucial in determining the overall performance of the sector for the year.

In conclusion, the July 2024 retail sales data, as reported by the CNBC/NRF Retail Monitor, paints a picture of a resilient retail sector that continues to grow despite various economic challenges. The data highlights the importance of key shopping periods like back-to-school season and the effectiveness of promotional events in driving sales. As the economy continues to navigate through uncertainties, the retail sector's performance will remain a key indicator of overall economic health and consumer sentiment.

Key facts from the July 2024 CNBC/NRF Retail Monitor report

Total retail sales (excluding auto and gas) increased 0.74% month-over-month and 0.92% year-over-year

Core retail sales grew 0.95% month-over-month and 1.69% year-over-year

Online and non-store sales led with 18.45% year-over-year growth

Health and personal care stores saw 9.68% year-over-year increase

Clothing and accessories stores up 5.27% year-over-year

Furniture and home furnishings stores declined 4.79% year-over-year

Total sales for the first seven months of 2024 were up 2.1% year-over-year

Core sales for the first seven months of 2024 increased 2.4% year-over-year

Details from the July 2024 Retail Monitor graph

The CNBC/NRF Retail Monitor, powered by Affinity Solutions, provides a month-by-month breakdown of retail sales growth from February to July 2024. This data offers valuable insights into the retail sector's performance throughout the first half of the year.

In July 2024, total retail sales grew by 0.74% month-over-month, while core retail sales (which exclude restaurants, automobiles, and gasoline) showed a stronger increase of 0.95%. This represents a significant improvement from June, where total retail sales grew by 0.47% and core retail sales by 0.30%.

The graph illustrates fluctuations in retail sales growth throughout the first half of 2024. February started with modest growth, with total retail sales up 0.40% and core retail sales up 0.27%. March saw a slight dip, with total retail sales growing by 0.36% and core retail sales by 0.23%.

April showed divergence between total and core retail sales, with total sales dropping to 0.26% growth while core sales increased to 0.40%. May marked the strongest month for retail sales in the period shown, with total retail sales surging by 1.35% and core retail sales by 1.20%.

June experienced a noticeable slowdown, with total retail sales growth falling to 0.47% and core retail sales to 0.30%. However, July's figures indicate a recovery, particularly in core retail sales.

This monthly breakdown provides context for July's performance, showing that while growth has been inconsistent throughout the year, July represents a strong rebound from June's slower growth. The fact that core retail sales outpaced total retail sales in July suggests particular strength in non-auto and non-gasoline retail categories.

These detailed monthly figures underscore the importance of monitoring retail trends over time, as they can provide early indicators of broader economic patterns and consumer behavior shifts. The strong performance in July, especially in core retail sales, aligns with the report's findings on increased back-to-school shopping and the success of promotional events during the month.