**MNI 5 THINGS: July US Retail Sales Surprise +0.5%, Autos Up>

--5 Things We Learned From The July Retail Sales Data

By Kevin Kastner

     WASHINGTON (MNI) - The following are the key points from the July 

retail sales report from the Commerce Department released Wednesday:               

     - July retail sales rose 0.5% in the month, above analysts 

projections for a 0.1% gain, but right on the market whisper number, 

with the assumption of weak auto and gas sales proven wrong. Other sales 

categories were generally higher in July as well, but June total sales 

month was revised lower, so the market reaction is likely to be mixed. 

     - Excluding a 0.2% gain in motor vehicle sales, retail sales were 

still up 0.6%, compared with the 0.4% gain expected. The gain in overall 

sales and sales excluding motor vehicles were revised sharply lower in 

June and headline sales were also revised modestly lower in May. 

Analysts have recently tended to overestimate overall sales in July, so 

today's data sharply deviates from that trend. 

     - July sales rose 0.6% ex. motor vehicle and gas, and were up 0.5% 

for the "control" group (ex auto, building materials, gas and food 

services), both above the rates seen in June and a sign that the 

strength seen in the second quarter did not let up. 

     - Gas station sales surprised to the upside, registering a 0.8% 

gain in the month (retail sales ex. gas +0.5%), while building materials 

sales were flat and food services sales were up 1.3%. The other 

categories were generally higher, with the exception of furniture, 

health care, sporting goods, and the "miscellaneous" category. 

     - At an annualized rate, July total sales were up 4.3% from the 

second quarter average, based on an MNI calculation. Sales were up 4.9% 

ex motor vehicles, and up 4.6% ex autos, building materials, gas, and 

food services, suggesting no real let-up from the second quarter pace. A 

slowdown in the other two months of the third quarter is possible, but 

it appears at this point that quarter is off to a good start. 

     ** MNI Washington Bureau: 202-371-2121 ** 

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