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Retail sales July 2024:

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An H&M store is seen in Herald Square on July 01, 2024 in New York City. 

Michael M. Santiago | Getty Images

Consumer spending held up even better than expected in July as inflation pressures showed more signs of easing, the Commerce Department reported Thursday.

Advanced retail sales accelerated 1% on the month, according to numbers that are adjusted for seasonality but not inflation. Economists surveyed by Dow Jones had been looking for a 0.3% increase. June sales were revised to a decline of 0.2% after initially being reported as flat.

Excluding auto-related items, sales increased 0.4%, also better than the 0.1% forecast.

There was also good news on the labor market front: Initial unemployment benefit claims for the week ended Aug. 10 totaled 227,000, a decrease of 7,000 from the previous week and lower than the estimate for 235,000.

Gains in sales were propelled by increases at motor vehicle and parts dealers (3.6%), electronics and appliance stores (1.6%), and food and beverage outlets (0.9%). Miscellaneous retailers saw a plunge of 2.5% while gas stations saw receipts climb just 0.1% and clothing stores were down 0.1%.

Stock market futures rose sharply following the Thursday morning data releases, while Treasury yields spiked as well.

The report comes the same week as data showing that inflation eased slightly in July.

Prices that consumers pay for goods and services increased 0.2% on the month, and the annual inflation rate declined to 2.9%, its lowest since March 2021. At the same time, wholesale prices were up just 0.1% on the month and 2.2% on the year.

While the inflation numbers remain above the Federal Reserve’s 2% target, the data shows continued easing of price pressures that had peaked two years ago. Financial markets expect the Fed to respond with its first rate cut in more than four years when it next meets in September, though a resilient consumer could give policymakers more reason to take a measured approach to cuts.

Echoing the theme of a stable consumer, Walmart earlier Thursday reported strong earnings and sales for the previous quarter and raised its outlook, though it sounded some cautionary notes about the second half of 2024.

In addition to looking for lower rates, investors also increasingly are expecting the Fed to turn its attention from a laser focus on inflation to a broader look at potentially weakening conditions in the labor market and elsewhere.

Unemployment benefit filings numbers from the Labor Department also showed that continuing claims, which run a week behind, declined slightly to 1.864 million. A weaker-than-expected July payrolls report had stirred concern that the labor market could be weakening.

Other economic data released Thursday showed that the manufacturing picture is wobbling.

The New York Fed’s Empire State Manufacturing gauge edged higher but was still in negative territory at -4.7, slightly better than the -6 estimate. At the same time, the Philadelphia Fed manufacturing measure slid to -7, its first negative reading since January and well below the forecast for 7.9.

Both indexes measure the percentage of companies reporting expansion against contraction.

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Economics

UK inflation September 2024

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The Canary Wharf business district is seen in the distance behind autumnal leaves on October 09, 2024 in London, United Kingdom.

Dan Kitwood | Getty Images News | Getty Images

LONDON — Inflation in the U.K. dropped sharply to 1.7% in September, the Office for National Statistics said Wednesday.

Economists polled by Reuters had expected the headline rate to come in at a higher 1.9% for the month, in the first dip of the print below the Bank of England’s 2% target since April 2021.

Inflation has been hovering around that level for the last four months, and came in at 2.2% in August.

Core inflation, which excludes energy, food, alcohol and tobacco, came in at 3.2% for the month, down from 3.6% in August and below the 3.4% forecast of a Reuters poll.

Price rises in the services sector, the dominant portion of the U.K. economy, eased significantly to 4.9% last month from 5.6% in August, now hitting its lowest rate since May 2022.

Core and services inflation are key watch points for Bank of England policymakers as they mull whether to cut interest rates again at their November meeting.

As of Wednesday morning, market pricing put an 80% probability on a November rate cut ahead of the latest inflation print. Analysts on Tuesday said lower wage growth reported by the ONS this week had supported the case for a cut. The BOE reduced its key rate by 25 basis points in August before holding in September.

Within the broader European region, inflation in the euro zone dipped below the European Central Bank’s 2% target last month, hitting 1.8%, according to the latest data.

This is a breaking news story and will be updated shortly.

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Economics

Why Larry Hogan’s long-odds bid for a Senate seat matters

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FEW REPUBLICAN politicians differ more from Donald Trump than Larry Hogan, the GOP Senate candidate in Maryland. Consider the contrasts between a Trump rally and a Hogan event. Whereas Mr Trump prefers to take the stage and riff in front of packed arenas, Mr Hogan spent a recent Friday night chatting with locals at a waterfront wedding venue in Baltimore County. Mr Hogan’s stump speech, at around ten minutes, felt as long as a single off-script Trump tangent. Mr Trump delights in defying his advisers; Mr Hogan fastidiously sticks to talking points about bipartisanship, good governance and overcoming tough odds. Put another way, Mr Hogan’s campaign is something Mr Trump is rarely accused of being: boring. But it is intriguing.

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Economics

Polarisation by education is remaking American politics

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DEPENDING ON where exactly you find yourself, western Pennsylvania can feel Appalachian, Midwestern, booming or downtrodden. No matter where, however, this part of the state feels like the centre of the American political universe. Since she became the presumptive Democratic presidential nominee, Kamala Harris has visited Western Pennsylvania six times—more often than Philadelphia, on the other side of the state. She will mark her seventh on a trip on October 14th, to the small city of Erie, where Donald Trump also held a rally recently. Democratic grandees flit through Pittsburgh regularly. It is where Ms Harris chose to unveil the details of her economic agenda, and it is where Barack Obama visited on October 10th to deliver encouragement and mild chastisement. “Do not just sit back and hope for the best,” he admonished. “Get off your couch and vote.”

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