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U.S. Retail Sales Fall 0.6% in July, Largest Monthly Drop in Over a Year

The pullback driven by earlier promotional timing, weaker online and gas-station receipts, and softer auto sales has pushed markets to expect the Federal Reserve will likely hold rates in September.

People shop at Zabar's supermarket in New York City, U.S., November 26, 2025. REUTERS/Jeenah Moon
Image
A display of a Bentley car at the Mall at Short Hills, in Short Hills, New Jersey, June 6, 2026, which has remained a premier luxury shopping destination for decades. (AP Photo/ Anne D'Innocenzio)

Overview

  • The Commerce Department’s advance report showed retail and food services receipts fell 0.6% from June to July, a report released on Friday, Aug. 14.
  • The decline was led by a 2.2% drop in nonstore (mostly e-commerce) sales, a 1.8% fall at motor vehicle dealers, and a 0.9% decline in gasoline-station receipts.
  • A measure used for GDP calculations, the retail 'control group' that strips out autos, building supplies and gas, fell about 0.4%, signaling weaker underlying goods demand.
  • Analysts said part of the drop reflected timing effects from Amazon moving Prime Day into June and lower fuel receipts from falling gasoline prices, and the report combined with weak July jobs and mild inflation readings has reduced the odds of a September rate hike.
  • Despite the monthly pullback, year-over-year retail receipts remain about 5% higher and economists note earlier boosts from large tax refunds, World Cup spending and rising equity wealth helped sustain activity through the spring.