Retail sales, a measure of spending at restaurants, stores and online, in July fell 1.1% to $617.7 billion, according to the Commerce Department. Analysts surveyed by Refinitiv had expected a decrease of 0.3%. The reading was 15.8% above year-ago levels. June’s reading was revised higher by 0.1 percentage point to 0.7%.
"The delta variant seems to have hurt consumer confidence more than actual sales, but slowing growth is worth watching," said Ted Rossman, senior industry analyst at CreditCards.com. "The fall and winter could pose greater challenges to bar and restaurant operators, especially if COVID remains a significant issue."
The number of new coronavirus cases last month reached the highest level since the end of April as the delta variant spread across the country. Case counts continued to increase through the middle of August.
Sales at clothing and accessory stores climbed 2.8% from June and 43.4% year over year. Food services and drinking places saw sales increase 3% last month and 38.4% year over year.
Meanwhile, sales at motor vehicle and parts dealers and furniture stores continued to slide as the industries are still dealing with supply-chain dislocations and higher prices.
Sales at auto dealers fell 4.3% in July as furniture sales dipped 6.07%.
Retail sales excluding autos were down 0.4% compared with the increase of 0.1% that analysts had anticipated.