U.S. Retail Sales Fell 1.1% in July as Spending Fell Across Categories

Spending at U.S. retailers fell sharply in July, amid cooling purchases of goods and signs of some pullback in consumer demand as U.S. Covid-19 cases tied to the Delta variant rose.

Retail sales—a measure of purchases at stores, at restaurants and online—fell 1.1% last month compared with June, the Commerce Department reported Tuesday. Excluding autos—a category where supply-chain issues have limited available inventory—sales were down 0.4%.

Tuesday’s report suggested Americans continued to shift spending toward services in July. Sales dropped across several categories, primarily autos—which was down 3.9%—but also clothing, sporting goods and furniture. The retail sales figures capture spending mostly on goods, and don’t include services such as travel, entertainment and recreation.

Restaurants and bars were a bright spot, with sales rising 1.7% over the month, while sales at nonstore retailers—a proxy for online retail sales—fell 3.1%.

Retail sales rose briskly earlier in the summer, as shoppers boosted spending on services, such as dining out and traveling, and away from goods. That shift occurred as more Americans became vaccinated and state and local governments eliminated many Covid-19-related restrictions, some of which have now been reimposed with the recent rise in coronavirus cases.