US retail sales fall 0.6% as sentiment drops

US retail sales fell 0.6 percent in July from the previous month to $763.6 billion, while consumer sentiment dropped in August, new data showed Friday.

The Department of Commerce figures marked the weakest monthly performance for retail sales in more than a year. A University of Michigan survey showed consumer confidence fell by around 8 percent in August, ending two months of gains.

The survey also showed expectations for inflation over the year ahead edged up to 4.3 percent in August from 4.2 percent in July.

Retail sales at motor vehicle and parts dealers fell 1.8 percent from June, while online store sales fell 2.2 percent. Sales at gasoline stations dropped 0.9 percent, and spending at grocery stores ticked down. Hobby spending was flat.

Excluding auto dealers and gasoline stations, retail sales dipped 0.2 percent month on month. Total retail sales were still 5.0 percent higher than in the same period a year earlier.

“American consumers are showing signs of fatigue. July retail sales were disappointing on all levels,” said Heather Long, chief economist at Navy Federal Credit Union.

Long said consumers likely brought forward some spending to online sales events in June. She said that even with lower spending on gasoline in July, consumers were not eager to spend elsewhere.

Oliver Allen, an economist at Pantheon Macroeconomics, cautioned that a sharper slowdown could lie ahead. He cited the end of support to household cash flows from tax refunds, pressure from higher energy prices, weak underlying income growth and limited room for the personal saving rate to fall further.