My Thoughts about those July Retail Sales

Consumers spent at retailers & restaurants just fine, but Amazon Prime Day and seasonal adjustments wreaked some havoc.

By Wolf Richter for WOLF STREET.

Not seasonally adjusted, retail sales rose by 0.9% in July from June, and by 5.2% year-over-year, to $784 billion (blue line in the chart), with many retailer categories booking big year-over-year gains, according to data from the Census Bureau today.

In terms of ecommerce sales: This year, Amazon Prime Day, a huge event not just for Amazon, was in June. Then in July, ecommerce sales dipped from that spike (-2.0% not seasonally adjusted), but less than last year after Prime Day month (-4.4%).

But in 2025, Prime Day was in July, and so the year-over-year gain of 6.2% in July 2026 (no Prime Day) was measured against July 2025 (with Prime Day). Ecommerce has become the #1 retailer category; it moves the needle.

And the acid test for consumer discretionary spending: people splurged at restaurants, bars, delis, cafés, and other “Eating and drinking places.” Sales jumped month-to-month and by 6.0% year-over-year, no slowdown in sight.

Not seasonally adjusted, year-over-year:

Miscellaneous store retailers (includes cannabis stores): +11.6%
Ecommerce, despite the shift in Amazon Prime Day: +6.2%
Food services and drinking places: +6.0%
Building materials, garden equipment & supplies dealers: +5.9%
Clothing & accessory retailers: +5.4%
General merchandise retailers: +4.5%
Motor vehicle dealers: +2.0%
Food & beverage stores: +1.7%

The seasonal adjustments knocked sales down by 0.6% in July from June, to $763 billion, but they were still up by 5.0% year-over-year (red line).

Not seasonally adjusted, sales always spike in December, the high of the year, then essentially collapse in January/February (blue line). Seasonal adjustment factors attempt to iron all that out. Over a 12-month period, the seasonal adjustment factors sum up to zero, so if they go awry in one month, they’ll correct in another month.

Seasonal adjustments are complex; they’re handled by the Census Bureau’s X-13 ARIMA-SEATS software program, based on numerous historical data points, to account for seasonal variations caused by things such as weather patterns, holiday gift buying, and differences in the number of “trading days,” which exclude weekends and holidays, which can be problematic because many retailers are open 7 days a week, and ecommerce is open 24/7.

Seasonal adjustments are trying to make month-to-month changes meaningful, but they can go awry, and it’s sometimes good to look at both, seasonally adjusted sales (red) and not seasonally adjusted actual sales (blue), despite their large seasonal fluctuations.

Ecommerce: the mess around Amazon Prime Day. In June, ecommerce sales had been boosted by Amazon Prime Day (+2.4% month-to-month, +16% year-over-year, to $138 billion, not seasonally adjusted).

And in July, sales came off that Prime Day boost, falling by 2.0% month-to-month, to $135 billion, but where still higher than in May, and were up by 6.2% year-over-year.

But, but, but… In 2025, Amazon Prime Day was in July, not June. And so the 6.2% year-over-year increase in July 2026 (without Prime Day) against the huge July 2025 (with Prime Day) showed a lot of strength in ecommerce spending.

In August 2025, sales had fallen by 4.4% from Prime Day July. In July 2026, sales fell by only 2.0% from Prime Day June, which confirms this strength in spending.

It’s not that consumers cut back or are collapsing or whatever. It’s that there was Prime Day in June, complicated further by the fact that last year, it was in July. And seasonal adjustments made the whole thing worse.

Ecommerce retailers have become the #1 category on a 12-month basis, accounting for 18% of total retail sales. They include sales by the ecommerce operations of brick-and-mortar retailers, such as Walmart (one of the largest ecommerce operations in the US), Macy’s, Costco, Target, and all the others. Even grocery sales are migrating in more consequential numbers to ecommerce.

Sales at motor vehicle dealers rose by 0.6% in July from June, and by 2.0% year-over-year, to $135 billion, not seasonally adjusted (blue).

Seasonally adjusted, sales got knocked down by $6 billion to $129 billion, down by 2.0% in July from June (red).

And inflation is not helping sales. The CPI for used vehicles declined in July from June (-0.2%) and year-over-year (-1.8%); The CPI for new vehicles also dipped a hair in July from June and was up only 0.5% year-over-year.

Motor vehicle dealers, which include auto dealers plus dealers of motor cycles, RVs, ATVs, snowmobiles, etc., were long the #1 category of retailers, but like other retailers, have lost ground to ecommerce, and have been surpassed by ecommerce during the current 12-month period, and their share dipped to 17% of total retail sales on a 12-month basis.

Sales at restaurants and bars jumped by 1.8% in July from June, and by 6.0% year-over-year, to $107 billion. Seasonally adjusted, sales rose by 0.5% month-to-month.

Sales at these “food services and drinking places” are a barometer of consumer discretionary spending, of people splurging, doing stuff because they want to, not because they have to, and it has become the #3 largest retailer category with a share of 12% of total retail sales. Another sign that consumers are out there dropping money left and right.

The sales increase of 6.0% far outran the rate of CPI inflation for “food away from home” of 3.4%.

Sales at food and beverage stores bounced by 4.6% in July from June and rose by 1.7% year-over-year, to $88 billion. Seasonally adjusted, sales have been essentially flat for four months.

More grocery sales are migrating from brick-and-mortar stores in this category to “general merchandise stores,” such as Walmart and Costco (see “general merchandise stores” below) and to ecommerce (see above).

In a decades-long trend, food purchases have also wandered off to restaurants (see above). Spending in restaurants began to exceed spending at food and beverage stores in 2019, and the gap has dramatically widened since then.

The year-over-year increases have been below the rate of CPI inflation for “food at home” (purchased at stores and markets) of 2.7%, which illustrates the competitive challenges this category of retailers faces against General merchandise retailers, such as Walmart, Costco, etc., ecommerce, and restaurants.

Sales at general merchandise stores jumped by 2.1% month-to-month and by 4.5% year-over-year, to $80 billion, not seasonally adjusted. Seasonally adjusted, sales rose by 0.3% in July from June.

This #5 category of retailers, with a share of 10.5% of total retail sales, includes the brick-and-mortar operations of Walmart, the largest grocer in the US, and its food sales are included here, and not in sales at “food and beverage stores.” But the huge ecommerce operations of general merchandise retailers are included in ecommerce.

Sales at gas stations move in near-lockstep with the price of gasoline, which had spiked in March through mid-May, and then plunged back some. July is also peak driving season, when sales always surge. Gasoline sales are very seasonal.

Not seasonally adjusted, sales jumped by 1.6% month-to-month (the driving season) and by 16% year-over-year (tracking the yoy price spike of gasoline), to $65 billion. But seasonally adjusted, sales fell by 0.9% in July from June.

Sales at building materials, garden supply and equipment stores fell month-to-month by 4.4%, but rose year-over-year by 5.9%, to $42 billion. Seasonally adjusted, sales rose by 0.3% in July from June.

Sales at health and personal care stores rose by 1.0% month-to-month, and by 1.5% year-over-year, to $41 billion, not seasonally adjusted. Seasonally adjusted, sales rose by 0.7% month-to-month.

Sales at clothing and accessory stores jumped by 7.0% month-to-month and by 5.4% year-over-year, to $28 billion, not seasonally adjusted. Seasonally adjusted, sales jumped by 2.0% month-to-month.

Sales at miscellaneous store retailers fell by 3.1% month-to-month from the record in June, and spiked by 11.6% year-over-year, to $17.5 billion, not seasonally adjusted. Seasonally adjusted, sales jumped by 0.5% month-to-month.