US retail sales expected to begin the summer on a high note

Consumers probably opened their wallets with gusto in July. The preliminary analysis suggests that retail and food services sales jumped by 1.0% last month, erasing the surprisingly weak -0.3% print posted in May. The projected pickup in activity is expected to be broadly based during the reference period. If the assumption that unit motor vehicle purchases rebounded to a seasonally adjusted annual rate of 17.5 million is on the mark, auto-dealer revenues likely climbed by about $950 million, adding two ticks to headline sales in July. 

Net of the projected strength in motor vehicle demand, retail sales probably expanded by 0.9% - the largest one-month gain since March. Further adjusting for forecasted increases in building materials purchases and gasoline service-station receipts, retail control - the portion of the Census Bureau's advance report that is used by government statisticians to produce nominal consumer goods spending estimates - is expected to climb by 0.8%, erasing the 0.1% prior-month. 

"Our estimate would place the closely followed spending metric in July 3.8% annualized above its April-June average, following a 4.1% spring-quarter gain," says Societe Generale.