US retail sales declined 0.6% in July, the largest monthly drop in more than a year, as American shoppers reduced spending. Non-store retailers, including online platforms such as Amazon, recorded the steepest decline.
The figures point to a softer start to the third quarter after stronger demand earlier in 2026.
The Drivers of This Activity
Advance data from the US Census Bureau showed retail and food services sales fell to $763.6 billion in July, down 0.6% from June after a 0.2% increase the previous month. Economists had expected a modest 0.1% rise. The drop was the biggest since May 2025.
Non-store retailers, a category that includes e-commerce and Amazon, saw sales fall 2.2%. Analysts attributed much of the weakness to the earlier timing of Amazon’s Prime Day event, which took place in June rather than July this year. Motor vehicle and parts dealers declined 1.8%, gasoline stations fell 0.9% and electronics and appliance stores dropped 0.5%.
Sales excluding automobiles and gasoline were down 0.2%. The control group used in GDP calculations, which strips out autos, gasoline, building materials and food services, fell 0.4%. Year-over-year sales remained 5% higher.
Impact and Broader Context
The unexpected decline suggests households are becoming more cautious amid ongoing cost-of-living pressures, even as some categories such as clothing and health stores posted gains. Temporary factors, particularly the shift in Amazon’s major sales event, amplified the monthly drop in online spending.
Underlying demand appears less weak once these one-off influences are considered, yet the control-group decline indicates a genuine slowdown in core goods spending. Markets and policymakers will watch subsequent months to determine whether the pullback is temporary or signals a broader cooling in consumer activity.
Further retail data and inflation readings will clarify the health of US household spending heading into the second half of the year.
Source: US Census Bureau; The New York Times; Trading Economics
US Census Bureau Advance Monthly Sales for Retail and Food Services