Plus, online and other nonstore sales increase 19.3% year over year on an adjusted basis.

(Bloomberg)—U.S. retail sales rose by more than it has in four months in July, with a surge in online purchases, offering some comfort for the economic-growth picture amid increasing concern a downturn is coming. 10 of 13 major retail categories increased, led by a 2.8% monthly jump for nonstore sellers on an adjusted basis. Nonstore sellers include online merchants, but also retailers that sell via phone and catalog. Online and other nonstore sales were up 19.3% year over year on an adjusted basis.

Retail sales in July may have been propped up by Amazon.com Inc.’s 48-hour Prime Day sales event, which the company said surpassed sales from the previous Black Friday and Cyber Monday combined. The promotion also likely drove shoppers to rivals Walmart Inc. and Target Corp. Amazon is No. 1 in the Internet Retailer Top 1000. Walmart is No. 3 and Target is No. 16.

The value of overall retail sales climbed 0.7% on an adjusted basis in July after a downwardly revised 0.3% increase in the prior month, according to Commerce Department figures.

The retail reading topped all estimates in a Bloomberg survey of economists that had called for a 0.3% gain. Sales in the “control group” subset, which some analysts view as a more reliable gauge of underlying consumer demand, rose 1% and also exceeded the most optimistic projection after a 0.7% rise in June. The measure excludes food services, car dealers, building-materials stores and gasoline stations.

The fifth-straight monthly increase in retail sales shows Americans, buoyed by plentiful jobs and wage gains, are still spending—a welcome sign as the trade war with China weighs on the global outlook with threats of new levies on consumer goods. Personal consumption, the biggest part of the economy, was the largest driver of the expansion in the second quarter.

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“The numbers are extremely strong and they come on the back of several good months in a row,” said Stephen Stanley, chief economist at Amherst Pierpont Securities LLC. “The main driver is the labor market, kicking off very good income gains. It’s a consumer that’s got plenty of wherewithal to spend.”

Walmart on Thursday posted strong second-quarter sales and boosted its full-year outlook, and its chief financial officer said the company has used its scale to minimize price increases.

U.S. sales at department stores climbed 1.2% for the best monthly gain since October.

Among the main categories, spending declined at automobile dealers, while sales for both health and personal care stores and sports and hobby retailers dropped the most this year.

Rate cut

Fed officials cut interest rates last month for the first time in a decade while saying the labor market remains strong and citing robust consumption despite growing headwinds. Still, President Donald Trump’s feud with Beijing adds to global growth risks as signs of fragility spread from Germany to China and Singapore, and investors continue to expect additional rate reductions.

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Motor vehicle dealers saw spending drop 0.6% in July after increasing 0.3% in the previous month. Industry data from Wards Automotive Group previously showed July unit sales slipped to a three-month low.

Excluding automobiles and gasoline, retail sales rose 0.9% month-over month in July, after a 0.6% gain the previous month.

NRF’s take

“July’s strong results are consistent with a confident consumer,” NRF chief economist Jack Kleinhenz says. “Households are in good shape with spending and that should continue as long as the labor market remains healthy. But it’s important to remember that today’s data is looking backward at what was happening a month ago. The impact of volatile financial markets and increased trade tensions in recent weeks may put a wind of caution in consumer spending as we move forward in 2019.”

The release of July’s numbers comes two days after the Trump administration delayed new tariffs on some consumer goods until Dec. 15 to avoid any impact on holiday spending, but many products will still be hit by tariffs taking effect Sept. 1 as scheduled.

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