U.S. retail and food services sales fell 0.6% in July, the first monthly drop in nine months, according to advance estimates from the Census Bureau released August 14. Seasonally adjusted sales came in at $763.6 billion, down from a revised $768.1 billion in June.
The pullback ends a stretch of eight straight monthly gains. But it doesn't look like a collapse. Compared with July 2025, sales are still up 5.0% year-over-year, and the May–July period as a whole ran 6.3% ahead of the same window last year.
A Spring Bump That Couldn't Hold
The July decline follows a spring spending surge that the Associated Press tied to tax refunds. Consumers had more cash in hand earlier in the year, and they used it. By midsummer, that extra money had largely been spent.
The control measure, which excludes motor vehicles and gasoline stations, slipped just 0.2% month-over-month in July. That's a softer drop than the headline number, suggesting the weakness wasn't spread evenly across every aisle.
Online Sales Took the Hardest Hit
Nonstore retailers—the category that captures most online shopping—fell 2.2% month-over-month in July. That's the sharpest decline among the major categories in the report, and it stands out against the overall 0.6% dip.
Why online took the brunt isn't spelled out in the data. But the spring tax-refund bump likely inflated earlier e-commerce figures, and July's numbers may be a correction to that. Physical stores, by comparison, held up better.
What the Revised June Numbers Mean
June's total was revised downward to $768.1 billion from the initial estimate. That revision matters because it changes the baseline for July's comparison. Even with the drop, the level of sales remains historically high.
The year-over-year growth of 5.0% is still solid, especially with inflation running well below that pace. The May–July stretch, up 6.3% from a year earlier, shows that consumer spending hasn't fallen off a cliff—it's just cooled after a hot spring.
The Census Bureau's advance estimates are preliminary. Revised figures for July will come out in the monthly retail report, typically about a month later. Until then, the picture is one of a slowdown, not a reversal.
