Canadian retail sales rose more than expected in June, indicating a rebound in activity, particularly in the motor vehicle and parts dealers, sporting goods stores, and gas stations sectors, while spending on rate-sensitive products like furniture contracted.
Recent profit reports from companies such as Amazon, Walmart, and Home Depot, along with other consumer statistics, indicate that the case for a 2023 recession is weakening, as the consumer economy shows resilience with rising real incomes, substantial savings, and continued spending in sectors like automobiles and services.
Americans continued to spend on dining out despite concerns about recession and inflation, with retail sales at restaurants and bars increasing by 11.8% in July and 9.5% in June compared to the same period last year, according to the Commerce Department. The strong consumer spending in this sector is seen as a positive sign for the economy and has been reflected in the earnings growth of restaurant companies.
Despite overall solid consumer spending, retail earnings reports indicate a shift towards more cautious shopping habits, with lower-income shoppers feeling economic pressure and opting for essential items and discounts at off-price and discount retailers. Delinquencies on department store credit cards are rising, suggesting a stretched consumer, and retailers are bracing for the impact of the resumption of student loan payments on shoppers' budgets. The upcoming back-to-school season and Halloween will serve as indicators for the rest of the year and the holiday season.
Retail sales in the UK increased by 4.1% in August, with non-food items experiencing the strongest growth due to higher spending on health and beauty, although clothing and footwear sales were weaker; however, the increase in sales was partly driven by rising prices, indicating that consumers are buying fewer items but spending more.
Asian American malls are thriving in the post-pandemic economy by attracting diverse clienteles with social gathering places, community events, and specialty products that go beyond shopping.
Furniture retailers are experiencing a significant sales slump as consumers shift their spending away from large-ticket furniture pieces and towards other categories, reflecting a broader shift in spending patterns since the pandemic. Factors such as rising home prices, high mortgage rates, and reduced home purchase activity have contributed to the slowdown, although some retailers are optimistic that furniture purchases may increase in the future.
Retail sales in the US remained resilient in August, with a 0.6% month-on-month increase, surpassing expectations of 0.2%, indicating a positive trend for the economy.
Retail sales in the US rose 0.6% in August compared to July, but the increase in gas prices could impact consumer spending during the holiday shopping season, according to a report from the Commerce Department. Excluding gas sales, retail sales only increased by 0.2% in August.
US retail sales, excluding automotive, are expected to rise by 3.7% over the holiday shopping season, indicating a return to pre-pandemic levels of holiday spending, driven by a more normal inflation environment and consumers' willingness to spend on experiences, electronics, and dining out.
