Key Highlights

  • US retail and food services sales fell 0.6% month over month in July to $763.6 billion, missing expectations of a 0.1% gain and marking the first decline since October 2025
  • Sales were still up 5.0% from July 2025, with the May-through-July period up 6.3% from the same stretch a year earlier
  • The decline was driven by weaker sales at nonstore retailers, motor vehicle and parts dealers, and gasoline stations
  • The control group measure used to calculate GDP, which excludes autos, gasoline, building materials, and food services, fell 0.4%

Retail Sales Post First Monthly Decline Since October

US retail and food services sales fell 0.6% month over month in July to $763.6 billion, missing economist expectations of a 0.1% increase and marking the first monthly decline since October 2025, according to Census Bureau data released Friday. The figures are adjusted for seasonal variation and holiday and trading-day differences but not for price changes. June's previously reported 0.2% increase was left unrevised.

Despite the monthly pullback, sales remained 5.0% higher than in July 2025, and the three-month period from May through July was up 6.3% from the same stretch a year earlier, suggesting the underlying trend in consumer spending remains positive even as the July print came in softer than anticipated.

Weakness Concentrated in a Few Key Categories

The monthly decline was driven primarily by falling sales at nonstore retailers, motor vehicle and parts dealers, and gasoline stations. Gasoline station sales alone fell 0.9% from June, though they remained up a sharp 16.2% from a year earlier, reflecting the impact of elevated fuel prices tied to the ongoing conflict in the Middle East on nominal sales figures even as underlying volumes softened.

Sales excluding motor vehicles and parts fell a more modest 0.3% on the month, while sales excluding gasoline stations fell 0.6%, indicating that the auto and energy categories were significant contributors to the overall headline miss rather than the decline being broad-based across all retail categories.

Control Group Reading Signals Softer Consumer Spending

Closely watched by economists for its direct link to GDP calculations, the retail sales control group, which excludes food services, auto dealers, building materials stores, and gasoline stations, fell 0.4% in July. This measure feeds directly into the personal consumption expenditure component of GDP, making the decline a signal that underlying consumer spending momentum may be cooling more than the headline figure alone suggests.

Timing Ahead of Key Fed Decisions

The report lands roughly two weeks before the Jackson Hole Economic Symposium, where Federal Reserve officials are expected to weigh incoming data, including this release, as they debate the path for interest rates. A weaker-than-expected retail sales print adds a data point favoring policymakers who see less urgency for aggressive rate action, even as some regional Fed presidents have separately pushed for immediate hikes to combat above-target inflation. The Census Bureau noted that monthly retail estimates are subject to revision based on the 2023 and 2024 Annual Integrated Economic Survey, with updated figures scheduled for release on September 28. The next Advance Monthly Retail report, covering August 2026 data, is scheduled for release on September 16.