Amazon Prime Day May Have Boosted U.S. Retail Sales

(Bloomberg) -- A key gauge of U.S. retail sales probably got a boost in July from Amazon.com Inc.’s Prime Day promotion. That’s set to be a bright spot in an otherwise subdued report Wednesday that reflects drags from auto sales and fuel prices.

With popular items including the Instant Pot cooker and the 23andMe Inc. genetic test, global sales during Amazon’s 36-hour Prime Day event in mid-July exceeded the company’s other recent promotions including Black Friday and 2017’s Prime Day. Such purchases may prop up the so-called retail “control group” -- which excludes auto dealers, gasoline stations, building materials and food services -- while the overall figures show a weaker increase than in the prior month.

What to Expect From July Retail Sales

  • Retail sales est. up 0.1% m/m after 0.5% gain in June
  • Excluding autos and gasoline, sales est. up 0.4% after 0.3% rise
  • Retail control group seen rising 0.4% after no change prior month

The “recent positive spending trend has been underpinned by a tight labor market and lower taxes resulting in strengthening disposable personal income growth,” Sam Bullard, senior economist at Wells Fargo Securities LLC, said in a research note. “Amazon’s Prime Day should lead to a boost at non-store retailers.”

Wedbush Securities Inc. analyst Michael Pachter estimated last month that shoppers spent $4.2 billion during during Amazon’s Prime Day sale, up 33 percent from a year ago, despite technical glitches that thwarted some customers at the start of the event. It’s also worth noting that other retailers such as Target Corp., Best Buy Co. and Walmart Inc. had promotions to coincide with Prime Day.

The Commerce Department’s report on retail sales is due at 8:30 a.m. in Washington.

The figures will give investors and economists a sense of consumer demand at the start of the third quarter following a 4 percent annualized pace of gains in spending during the April-June period, the fastest since 2014. Consumption may fail to match such increases in the second half, though retail sales are likely to remain relatively firm amid a tight labor market, steady-if-unspectacular wage gains, and fatter wallets thanks to tax cuts.

While Bullard and analysts at Goldman Sachs Group Inc. forecast a boost in July from Amazon’s Prime Day, JPMorgan Chase & Co. economist Daniel Silver said previous years’ Commerce Department retail figures are inconsistent with Prime Day results. Sales growth at nonstore retailers in July was strong in 2015 and 2017 but weak in 2016, he wrote in a note.

It’s “possible that these promotions pull in sales from nearby periods or other sources and that the net impact is not large enough to affect the aggregate economic data,” Silver said in a research note.

What Our Economists Say

While vehicle sales are often a proxy for broader consumer demand, the July retreat appears to be largely a response to sturdy June sales. While the weakness -- and possible contraction -- in headline retail sales will be distorted by autos, the underlying trend will nonetheless support Bloomberg Economics’ estimate for consumer spending to moderate in the current quarter following a gangbusters second-quarter.

-- Carl Riccadonna and Tim Mahedy, Bloomberg Economics


Read more for the full week-ahead preview from Bloomberg Economics.

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