Key Takeaways:

• Building Materials stores are down by 1.2% for the month, similar to the 1.1% drop for overall retail sales;
• Although sales are 8% higher annually, they are half the 16% average for total retail sales;
• Autos lead all categories in retail sales shortfall for July, off by 4.3% against June.

By Manuel Gutierrez, Consulting Economist to NKBA

Sales at Building Materials stores registered a 1.2% monthly decline in July to $39 billion. (Figure 1). This is the fourth consecutive month of falling sales for the category. Total sales for 2021 so far are still pacing 8% ahead of last year’s $35+ billion — but they still lag overall retail sales, which are 16% higher, year-over-year.

Along with Building Materials, total retail sales fell in July, down 1.1% from June to $618 billion. Total retail sales and building materials each peaked earlier this year, although the latter has shown a larger drop. Currently, retail sales are off by 1.8% since their April peak of $629 billion, while building materials have suffered a double-digit decline of 11% since hitting a high of $43 billion in March.

Building Materials stores registered their 4^th straight monthly sales decline in July.

Retail sales had recovered strongly in March, when sales jumped 11.3% to reach that $629 billion mark. Still, sales have been trending downward for the past few months.

The drop in July sales was driven by several categories, led by automobiles and service parts, which fell 4.3% for the month to $127 billion (left panel, Figure 3). Similar to the housing market, the automobile sector, which accounts for one of five retail sales dollars, has been plagued by inventoryshortages.

Excluding automobiles, retail sales dropped by just 0.4%. Online sales, which is usually a strong category, had the second largest monthly loss, off by 3.1% in July to $85 billion. It currently accounts for one in seven retail dollars (13.8%).

Building Materials had the 4^th largest monthly decline of all retail sub-groups, followed by sales at grocery and beverage stores, (labeled “food” in Figure 3), which fell 0.7% to $74 billion.

Annually (right panel, Figure 3), sales at Restaurants & Bars are up 38.4% from last year. This signals the continuing recovery in this sector, which has been gaining since the beginning of the year.

Sales at Department Stores and Electronics & Appliances Stores are also showing sizable annual gains, at 24%. However, their combined sales of $21 billion accounts for less than 4% of total retail sales.

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