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Japan Today
2 days ago
- Business
- Japan Today
Retail sales in U.S. rise a solid 0.5% in July from June as shoppers appear to shrug off tariff pressures
By ANNE D'INNOCENZIO Shoppers spent at a healthy pace in July, particularly at the nation's auto dealerships, as they appear to shrug off President Donald Trump's tariffs, which are starting to take a toll on jobs and lead to some price increases. Retail sales rose a solid 0.5% last month, and June spending was stronger than expected, according to the Commerce Department's report released Friday. June's retail sales were revised upward to 0.9%, from a 0.6% increase, the agency said. The pace in July matched economists' estimates. The increases followed two consecutive months of spending declines — a 0.1% pullback in April and a 0.9% slowdown in May. Excluding auto sales, which have been volatile since Trump imposed tariffs on many foreign-made cares, retail sales rose 0.3% in July. Auto sales rose 1.6%. They appear to have returned roughly to normalized spending after a surge in March and April as Americans attempted to get ahead of Trump's 25% duty on imported cars and parts and then a slump after that, according to Samuel Tombs, chief U.S. Economist at Pantheon Macroeconomics. The data showed solid spending across many retail sectors. Business at clothing stores was up 0.7% while online retailers saw a 0.8% increase. Business at home furnishings and furniture stores rose 1.4%. However, at electronics stores, sales were down 0.6%. And business at restaurants, the lone services component within the Census Bureau report and a barometer of discretionary spending, fell 0.4%, however as shoppers are focusing on eating at home to save money. A category of sales that excludes volatile sectors such as gas, cars, and restaurants rose last month by 0.5% from the previous month. The figure feeds into the Bureau of Economic Analysis's consumption estimate and is sign that consumers are still spending on some discretionary items July's spending likely got a boost from Amazon's Prime Day sales and competing online sales at Target, Walmart and other retailers, analysts said. 'Consumers have a little more spring in their step,' said Christopher S. Rupkey, chief economist at FWDBonds LLC, a financial markets research firm. 'Whether this is simply whistling in the dark, time will tell, but the tariff headline chaos did not keep consumers at home in July with the one caveat that they reduced their dining out spending. Retail sales do not give the economy a complete bill of health, but at least the consumer is not in headlong retreat.' But Rupkey noted that time will tell how consumers will react when they see higher prices on goods in shops in the mall in the months to come. Tariffs are starting to take a toll in other parts of the economy. Earlier this month, the Labor Department reported that U.S. hiring is slowing sharply as Trump's trade policies paralyze businesses and raise concerns about the outlook for the world's largest economy. U.S. employers added just 73,000 jobs last month, the Labor Department reported, well short of the 115,000 expected. Another government report, issued Tuesday, on U.S. inflation showed that inflation was unchanged in July as rising prices for some imported goods were offset by declining gas and grocery prices, leaving overall prices modestly higher than a year ago. Consumer prices rose 2.7% in July from a year earlier, the same as the previous month and up from a post-pandemic low of 2.3% in April. Excluding the volatile food and energy categories, core prices rose 3.1%, up from 2.9% in June. Both figures are above the Federal Reserve's 2% target. On a monthly basis, prices rose 0.2% in July, down from 0.3% the previous month, while core prices ticked up 0.3%, a bit faster than the 0.2% in June. The new numbers suggest that slowing rent increases and cheaper gas are offsetting some impacts of Trump's sweeping tariffs. Many businesses are also likely still absorbing much of the cost of the duties. The consumer price figures likely reflect some impact from the 10% universal tariff Trump imposed in April, as well as higher duties on countries such as China and Canada. But that may change. U.S. wholesale inflation soared unexpectedly last month, signaling that Trump's taxes are pushing costs up and that higher prices for consumers may be on the way. The Labor Department reported Thursday that its producer price index — which measures inflation before it hits consumers— rose 0.9% last month from June, biggest jump in more than three years. Compared with a year earlier, wholesale prices rose 3.3%. The figures were much higher than economists had expected. The report comes as major retailers like Walmart and Target are slated to report their fiscal second-quarter earnings reports starting next week. Analysts will stud the reports to see how much retailers are absorbing the costs and how much they're passing on to shoppers. They'll also want to get insight into the state of consumer behavior heading into the critical fall and winter holiday seasons. In May, Walmart, the nation's largest retailer, warned t hat it had increased prices on bananas imported from Costa Rica from 50 cents per pound to 54 cents, but it noted that a large sting for shoppers wouldn't start to appear until June and July. The retailer's chief financial officer, John David Rainey, told The Associated Press that he thought car seats made in China that were selling for $350 at Walmart would likely cost customers another $100. But a growing list of companies including Procter & Gamble, Cosmetics, Black & Decker and Ralph Lauren told investors in recent weeks that they plan to or have already raised prices. Some, like eyewear retailer Warby Parker, are trying to be selective and are trying to focus on raising prices on just their premium products as a way to offset the higher costs from tariffs. Warby Parker told analysts last Thursday that it plans to keep its $95 option. But it's increasing prices on select lens types. It also wants to cater more to older shoppers who need more expensive progressive lens. Warby Parker said that progressives, trifocals and bifocals make up roughly 40% of all prescription units sold industrywide. But just 23% of Warby Parker's business now is made up of progressives. Company executives said progressives are its highest priced offering and offer the highest profit margins. 'We were able to quickly roll out select strategic price increases that have benefited our growth,' Neil Blumenthal, co-chairman and co-founder and co-CEO of Warby Parker, told analysts last week. © Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
Japan Today
4 days ago
- Business
- Japan Today
Amazon expands its perishable delivery service, putting pressure on traditional grocers
FILE - An Amazon Prime logo appears on the side of a delivery van as it departs an Amazon Warehouse location in Dedham, Mass., Oct. 1, 2020. (AP Photo/Steven Senne, File) By ANNE D'INNOCENZIO Amazon is now rolling out a service where its Prime members can order their blueberries and milk at the same time as basic items like batteries and T-shirts and get them within hours. The online juggernaut said Wednesday that customers in more than 1,000 cities and towns including Raleigh, North Carolina; Milwaukee; and Columbus, Ohio, now have access to fresh groceries with its free same-day delivery service on orders over $25 for Prime members, with plans to reach over 2,300 cities and towns by year-end. Amazon called the move 'one of the most significant grocery expansions' for the online retailer as it introduces thousands of perishable items into its existing logistics network. The expansion is expected to put pressure on grocery delivery services offered by such rivals as Walmart, Kroger and Target, which all saw their shares take a hit in trading Wednesday. Amazon's shares rose 1%. Amazon said that if an order doesn't meet the minimum, members can still choose same-day delivery for a $2.99 fee. For customers without a Prime membership, the service is available with a $12.99 fee, regardless of order size. In the past, Prime subscribers' grocery orders were fulfilled through Amazon Fresh or Whole Foods Market. Prime members pay $14.99 monthly or $139 annually. Amazon launched its Prime membership in 2005, and it has become the gold standard for subscription services with a slew of perks including unlimited streaming with Prime Video and discounts at Whole Foods and Amazon Fresh. Walmart, which launched its membership program called Walmart + in 2020, has been racing to add more benefits. It costs $12.95 per month or $98 per year. Depending on members' location and availability, Walmart members can schedule same-day delivery for their groceries, including perishables. 'We're continuously innovating to make grocery shopping simpler, faster, and more affordable for our customers, especially Prime members,' said Doug Herrington, CEO of Worldwide Amazon Stores, in a statement. 'By introducing fresh groceries into our Same-Day Delivery service, we're creating a quick and easy experience for customers. ' Herrington noted that customers can order milk alongside electronics; oranges, apples, and potatoes with a mystery novel; and frozen pizza at the same time as tools for their next home improvement project—and check out with one cart and have everything delivered to their doorstep within hours. The company first tested the service in Phoenix, last year, and then added Orlando, Florida and Kansas City, Missouri, earlier this year. Amazon noted that many of its customers were first-time Amazon grocery shoppers who now return to shop twice as often with the same-day deliver service compared to those who didn't purchase food. It also noted that based on early sales, strawberries now regularly knock AirPods out of the top five best sellers of all products sold, while bananas, Honeycrisp apples, limes, and avocados round out the top ten best-selling perishable grocery items in their same-day delivery carts. 'It's a nice step forward,' said Jason Goldberg, chief commerce strategy officer at Publicis Groupe, a global marketing and communications company. 'It definitely makes them more competitive" in perishables. Goldberg noted that Amazon has struggled to succeed in fresh food and that shoppers have been confused ordering shelf stable items and perishables, and having them appear in different online shopping carts, including Amazon Fresh. He said this move will greatly improve the experience. Amazon said it generated over $100 billion in gross sales of groceries and household essentials last year not including sales from Whole Foods Market and Amazon Fresh. In June, Amazon said it was investing more than $4 billion to triple the size of its delivery network by 2026, with a focus on small towns and rural communities across the country. It also noted that it's using artificial intelligence to help it predict local customer preferences so it can stock popular items alongside items targeted for specific communities © Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
Japan Today
17-07-2025
- Business
- Japan Today
U.S. retail sales bounce around in a whipsaw trade environment
By ANNE D'INNOCENZIO Consumers picked up their spending in June after an earlier pullback, despite anxiety over tariffs and the state of the U.S. economy. Retail sales rose a better-than-expected 0.6% in June, the Commerce Department said Thursday, after two consecutive months of spending declines, a 0.1% pullback in April and a 0.9% slowdown in May. Earlier in the year, strong retail sales were driven by car sales as Americans attempted to get ahead of President Donald Trump's 25% duty on imported cars and car parts. The erratic spending is taking place during a period of mixed signals about the economy as well. The U.S. economy shrank at a 0.5% annual pace from January through March, but the U.S. job market is proving to be very resilient, and major tariffs keep getting postponed. Americans continue to spend in that environment with a heavy focus on necessities, rather than electronics or new appliances. Yet consumers haven't stopped spending on nonessential goods. Sales at restaurants, the lone services component within the Census Bureau report and a barometer of discretionary spending, rose moderately. 'Consumers are only feeling a modest amount of pressure from tariffs, and any weakness here is not having much of an effect in forcing them to pull back on more discretionary areas of spending such as restaurants and bars,' wrote William Blair's macro analyst Richard de Chazal. Yet Chazal fears that the administration may picking up false assurances from strong consumer spending. Consumer sentiment and markets have tumbled after aggressive tariff announcements. Retail sales in June included a 1.2% gain in sales of autos and auto parts. Spending expanded across most major categories including clothing and personal care. Excluding autos and automotive parts, sales rose 0.5%, according to the Commerce Department Clothing and accessories sales rose 0.9%, while health and personal care sales saw a 0.5% bump. Online retailers recorded a 0.4% gain. Electronics and appliance retailers, furniture stores and department stores all saw sales declines. A category of sales that excludes volatile sectors such as gas, cars, and restaurants rose last month by 0.5% from the previous month. The figure feeds into the Bureau of Economic Analysis's consumption estimate and is sign that consumers are still spending on some discretionary items. Heather Long, the chief economist at Navy Federal Credit Union, noted that layoffs remain low and consumers are still confident enough that the economy is chugging along. 'Don't count the American consumer out yet," said Long in a statement. "There's still a lot of trepidation about tariffs and likely price hikes, but consumers are willing to buy if they feel they can get a good deal. The word of the summer for the economy is resilient.' The retail sales report arrives amid a whipsaw frenzy of on and off again tariffs have that jolted businesses and households. For businesses, that has made it harder to manage supply and inventories. Americans are focusing more on necessities, when they do shop. The latest government report showed that inflation rose last month to its highest level since February as Trump's sweeping tariffs push up the costs of everything from groceries and clothes to furniture and appliances. Consumer prices rose 2.7% in June from a year earlier, the Labor Department said Tuesday, up from an annual increase of 2.4% in May. On a monthly basis, prices climbed 0.3% from May to June, after rising just 0.1% the previous month. Trump insists that the U.S. effectively has no inflation as he has attempted to pressure Federal Reserve Chair Jerome Powell into reducing short-term interest rates. Yet the new inflation numbers make it more likely that the central bank will leave rates where they are. Powell has said that he wants to measure the economic impact of Trump's tariffs before reducing borrowing costs. Americans have continued to spend, which is what the Fed had hoped to curtail a little bit with rate hikes. One big litmus test was Amazon's four-day Prime event along with competing retail sales from the likes of Walmart and Target that kicked off last week. Adobe Digital Insights, which tracks online sales, reported that the sales events drove $24.1 billion in online spending, a 30.3% increase compared with the same period last year. Still, those that were buying prioritized essentials like dish soap and paper products over big-ticket purchases, according to consumer data provider Numerator, based on its analysis of Amazon Prime orders. Deborah Weinswig, founder and CEO of Coresight Research, said she's becoming more optimistic about the financial health of the consumer after the Amazon Prime events. She said inventories are at a healthy level, and she didn't see big fire sales. 'People aren't buying things that they don't need,' she said. 'I think it's a healthier retail environment.' Retailers are now turning their attention to the back-to-school shopping season, which is the second largest consumer rush after the winter holidays. Coresight Research estimates that total U.S. back-to-school spending will increase by 3.3% year compared with the year-ago period, to $33.3 billion. And it predicts that shoppers will do a big chunk of their shopping before August to get ahead of tariffs. Economists will also dissect quarterly financial reports next month from major retailers like Walmart, Target and Macy's, both for consumer behavior and to gauge how businesses are navigating a chaotic period of global trade due to fluid U.S. policies. Levi Strauss & Co. said last week that it was cutting back on making styles that aren't selling and making targeted price increases as it moves production away from China due to tariffs. © Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
Japan Today
17-06-2025
- Automotive
- Japan Today
U.S. retail sales slide after a spring rush to beat tariffs
FILE - A Tariff Free sign to attract vehicle shoppers is at an automobile dealership in Totowa, N.J., on April 30, 2025. (AP Photo/Ted Shaffrey) By CHRISTOPHER RUGABER and ANNE D'INNOCENZIO Retail sales fell sharply in May as consumers pulled back from a spending surge early this year to get ahead of President Donald Trump's sweeping tariffs on nearly all imports. Sales at retail stores and restaurants dropped 0.9% in May, the Commerce Department said Tuesday, after a decline of 0.1% in April. Sales jumped 1.5% in March. The figure was pulled down by a steep drop in auto sales, after Americans ramped up their car-buying in March to get ahead of Trump's 25% duty on imported cars and car parts. Excluding autos, sales fell 0.3% in May. The sales drop is hitting after sharp declines in consumer confidence this year. Still, inflation has cooled steadily and unemployment remains low, which could fuel steady spending in the coming months, as the economy has remained mostly solid. A category of sales that excludes volatile sectors such as gas, cars, and restaurants rose last month by 0.4%, a sign that consumers are still spending on some discretionary items. Overall, the report suggests consumers have pulled back a bit but not dramatically so. The retail sales report covers about one-third of consumer spending, with the other two-thirds consisting of spending on services. Economists expect overall consumer spending to grow in the April-June quarter. 'Today's data suggests consumers are downshifting, but they haven't yet slammed the brakes,' Ellen Zentner, chief economic strategist for Morgan Stanley wealth management, said in an email. 'Like the economy as a whole, consumer spending has been resilient in the face of tariff uncertainty.' Yet many categories saw sharp declines. Car sales plunged 3.5%, while sales at home and garden centers dropped 2.7%. They fell 0.6% at electronics and appliance stores and 0.7% at grocery stores. There were some bright spots: Sales rose 0.9% at online retailers, 0.8% at clothing stores, and 1.2% at furniture stores. Gas station sales dropped sharply, by 2%, but that mostly reflects lower prices. The retail sales report isn't adjusted for inflation. Sales at restaurants and bars, a closely watched indicator of discretionary spending, fell 0.9% in May, though that followed a solid gain of 0.8% in April. Some consumer products companies say they are seeing the impact of tariffs on their own costs and sales. Paul Cosaro, CEO of Picnic Time, Inc., which makes picnic accessories like baskets, coolers, and folding chairs, said that orders from retailers are down as much as 40% this summer compared with a year ago. His company sells to a variety of stores like Target and Williams-Sonoma. Cosaro noted that some stores have been cautious because they're not sure how shoppers will react to higher prices. Some canceled orders because Cosaro couldn't tell them how much the new prices would be due to all the uncertainty. Roughly 80% of the company's goods are made in China, with the rest in India and Vietnam. The company, founded roughly 40 years ago and based in Moorpark, California, was forced to raise prices on average from 11% to 14% for this summer selling season, Cosaro said. A folding outdoor chair now costs $137 this month, up from $120 in late 2024, he added. The company's sales are still down this year, even though some shoppers accelerated their purchases out of concern that prices would rise. 'Shoppers are very price sensitive,' Cosaro said. The company has implemented a hiring freeze because of all the extra tariff costs, he added. So far this year the company, which employs from 70 to 100 people, has had to pay $1 million in tariffs. A year ago at this time, the bill was a third of that amount. Liza Gresko, a 42-year-old mother of three in Doylestown, Pennsylvania, said she has watched as prices for basics like toothpaste or shampoo begin to rise again, and has started to buy groceries in bulk to save money, as well as switching to generic brands. 'If I make these small changes, then we are sacrificing for the long term goal of saving more,' Gresko said. She has also begun shopping at thrift stores for children's clothes, rather than Macy's or H&M. 'Even with store sales and discounts, the rising costs make it unsustainable to continually purchase new clothing,' she said. The retail sales report comes as other evidence indicates shoppers have been pulling back more amid worries about higher prices from Trump's tariffs. Naveen Jaggi, president of retail advisory services in the Americas for real-estate firm JLL, said that he's hearing from malls that sales are slowing down heading into the official summer months. Retailers are pushing up back-to-school promotions to this month from July, he said. They want to get shoppers in early for fear consumers may not want to spend in the later months when prices will likely go up, he said. So far, Trump's tariffs haven't yet boosted inflation. Consumer prices rose just 2.4% in May compared with a year ago, the government said last week. Many stores and brands, including Walmart, Lululemon, and J.M. Smucker Co., have said they plan to or have raised prices in response to tariffs. Deckers Outdoor, which is behind such shoe labels as Hoka and Uggs, said late last month that it plans price increases, which will likely hurt sales. 'We expect to absorb a portion of the tariff impact,' Chief Financial Officer Steven Fasching told analysts. 'We also believe there is potential to see demand erosion associated with the combination of price increases and general softness in the consumer spending environment.' © Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
Japan Today
29-05-2025
- Business
- Japan Today
Already numb to tariff twists, U.S. importers see legal decisions as another price of doing business
By MAE ANDERSON and ANNE D'INNOCENZIO Businesses rattled by President Donald Trump's on again, off again tariffs absorbed more jolts on Thursday after a U.S. appeals court temporarily blocked a federal court order that would have halted most of his taxes on foreign imports. A three-judge panel of the U.S. Court of International Trade ruled late Wednesday that Trump overstepped his authority when he invoked the 1977 International Emergency Economic Powers Act to declare a national emergency as justification for his wide-ranging tariffs. But a federal appeals court on Thursday afternoon granted a motion allowing the government to continue collecting tariffs under the emergency powers law while the Trump administration challenges the trade court's decision. Even before the Court of Appeals for the Federal Circuit stepped in, business owners and the National Retail Federation had said that without a definitive word in the case, the Wednesday ruling only created more uncertainty and made it harder to budget and plan. 'The ruling by the U.S. Court of International Trade blocking most of President Trump's tariffs is just another chapter in this difficult journey toward a clear, consistent and strategic trade policy," Jonathan Gold, the trade group's vice president of supply chain and customs policy, said in an emailed statement. "We urge rapid resolution as this process continues in the courts.' The president invoked the emergency powers law in early April when he imposed varying import tax rates on products from dozens of countries, including the biggest trading partners of the U.S. After financial markets showed signs of panic, Trump lowered the rate to 10% for every country except China, whose goods were taxed at 145%. Jonathan Silva, the owner of WS Game Company, said he did not intend to change his plans based on the ruling. He has the board games his company sells made in China, 'We know that this will take time for the appeals process to take place and a final ruling to be instituted,' Silva said. 'But we are hopeful that this will be the beginning of a more academic use of tariffs in the coming months and years. All we want to do is have certainty in the environment that we are operating in, as the day-to-day retaliations and pauses are not conducive to business operations.' The CEO of electronics retailer Best Buy, Corie Barry, told reporters on Thursday that the legal news did not make her more or less optimistic but rather underscored the importance of continuing to remain agile while not changing course in response to near-daily tariff developments. 'I don't think there's anything we would do differently based on the news overnight,' Barry said. 'What I really tried to work with the team on is to not actually overreact to any given moment in time, but instead to stay maniacally focused on our customers and ensure we are bringing the right assortment, price, and (promotions) to them, whatever the backdrop.' Barry told analysts that Best Buy has taken a variety of steps to offset higher tariff costs, including pushing vendors to spread out where they do manufacturing. The company is increasing some prices to absorb tariff-related costs, she said, calling the move 'a last resort.' She declined to be specific given the fluid situation. Jim Umlauf, whose business, 4Knines, based in Oklahoma City, makes vehicle seat covers and cargo liners for dog owners and others, said the court ruling did not offer reassurance but only further complicated his decision-making. 'At this point, we don't know whether the decision will hold, whether it applies to (Trump's) original 2018 tariffs, or how it will be enforced,' he said. 'Without clarity, we're left planning around a moving target. Like many others, we've already locked in quotes and made purchasing decisions assuming tariffs would remain in place. This development, rather than offering relief, introduces new logistical complications at the worst possible time.' Kelsey O'Callaghan, the founder of a Salt Lake City kitchen and bathroom accessories company called Dorai Home, said she expected the trade war to continue. The constant flux since Trump's return to office has made her 'numb,' but O'Callaghan said she has tried to make educated decisions. The company already postponed the launch of several new products, laid off the CEO and some other key employees. It paused order shipments from China in early April but resumed some on a staggered basis when the president Trump lowered the rate for Chinese goods to 30% for 90 days. Now, Dorai Home plans to test price increases to see if shoppers will still buy its products. 'In a business sense, you have to try to create as much certainty and stability as you can with the variables you can control," O'Callaghan said. But some businesses were more optimistic. Burlington Coat Factory CEO Michael B. O'Sullivan said Thursday that the tariff pause might help discount retailers like his that buy excess inventory from other retail companies. The court ruling and continued uncertainty may further fuel a production race that started when the tariff rate for Chinese products were substantially reduced, O'Sullivan said. 'There's now a huge rush on production and shipping across the industry. Now, the court decision last night could add to that rush,' he said. 'Instead of shortages, this topsy-turvy stop/start surge has the potential to create attractive buying opportunities.' © Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
