U.S. Retail Sales, Fed Outlook, and Import Costs Paint Mixed Picture for Traders

Retail Sales Rise but Signals Remain Mixed

U.S. retail and food services sales rose 0.5% in July to $726.3 billion, following a revised 0.9% gain in June, according to the latest Census Bureau data. On an annual basis, July sales were up 3.9%, with nonstore retailers leading at +8.0% year-on-year and food services up 5.6%. Core retail trade also posted a 0.7% monthly gain. While these figures indicate consumer demand remains healthy, the moderate pace may keep expectations for aggressive Federal Reserve tightening in check.

Empire State Manufacturing Edges Back Into Positive

Manufacturing conditions in New York rebounded into positive territory for the first time since February. The Empire State Manufacturing Survey’s headline index rose 22 points to 5.5 in July. New orders and shipments moved into expansion territory, while inventories surged and delivery times lengthened. Notably, the employment index hit 9.2, marking two consecutive months of job gains. Price pressures are diverging, with input prices accelerating to an index level of 56.0, while selling prices held steady at 25.7. Businesses reported greater optimism, with the forward-looking general business conditions index climbing to 24.1.

Import Prices Firm, Led by Fuel and Industrial Goods

The U.S. import price index increased by 0.4% in July, reversing two months of declines. Fuel import prices led the rise with a 2.7% monthly gain—petroleum up 2.4%, natural gas up 4.7%. Nonfuel import prices advanced 0.3%, reflecting higher costs for industrial supplies, consumer goods, and capital goods. Year-on-year, overall import prices were still down 0.2%, driven by a 12.1% drop in fuel prices. Meanwhile, export prices edged up just 0.1% on the month, with nonagricultural goods supporting the gain.

Export Gains Slow as External Demand Levels Off

Export prices rose only slightly in July, up 0.1%, after a 0.5% rise in June. Agricultural exports were flat on the month, while nonagricultural goods—particularly automotive and capital goods—provided some lift. Year-over-year, export prices increased 2.2%, driven by firming prices in industrial and manufactured goods. However, destination-based data shows declining prices to Japan and flat results for Mexico, suggesting uneven global demand.

Outlook: Cautiously Bullish, but Fed Path Remains Unclear

The combination of strong retail figures, a rebound in regional manufacturing, and firming import costs suggests continued economic resilience. However, with fuel prices rebounding and supply availability still tight, input costs could pressure margins. For traders, the short-term bias remains cautiously bullish, supported by improving business sentiment and stable consumer spending—but attention remains on the Federal Reserve’s inflation and rate response.

More Information in our Economic Calendar.