Clothing and footwear expenditures rebounded in July, increasing 1.5% to $400.68 million from $394.62 million in June, the U.S. Bureau of Economic Analysis (BEA) reported Thursday.
Clothing and footwear spending had fallen 0.6% in June compared to May after four straight months of increased spending in the sector. This followed a 0.4% increase in July core retail sales that exclude automobiles, gasoline stations and restaurants compared to June, according to the National Retail Federation. Clothing and clothing accessory store sales were up 5.4% year-over-year and 1.3% percent month-over-month.
BEA said personal income increased $54.8 billion, or 0.3%, in July. This primarily reflected increases in wages and salaries, personal dividend income and rental income.
Disposable personal income (DPI), considered a barometer for retail spending, also rose 0.3%, or $52.5 billion. Personal consumption expenditures (PCE) were up 0.4%, or $49.3 billion.
Real DPI, adjusted for inflation, increased 0.2% in July and real PCE also rose 0.2% percent. The PCE price index increased 0.1%. Excluding food and energy, the PCE price index increased 0.2%.
BEA said the $29.6 billion increase in real PCE in July reflected an increase of $10.9 billion in spending for goods and an $18.9 billion increase in spending for services. Within goods, prescription drugs were the leading contributor to the increase. Within services, the largest contributor to the increase was spending for food services and accommodations.
James Bohnaker, associate director of U.S. and consumer economics at IHS Markit, said, “Improving household finances, fueled by solid wage gains and lower personal tax rates, will help bolster consumer spending for the next several quarters.”
Personal outlays increased $52.7 billion in July, while personal saving was $1.05 trillion. The personal saving rate–personal saving as a percentage of disposable personal income–was 6.7%, easing from 6.8% the previous month as nominal spending gains slightly outpaced personal income in July, Bohnaker noted.