Vehicles, furniture top retail sales gains; Philips boosts US manufacturing investment; Forecasters upgrade growth prospects

July’s U.S. retail and food service sales increased 0.5% from the prior month and grew 3.9% from a year earlier, led by cars and home furnishings, even as the latest consumer surveys showed lingering concerns over inflation and slowing job growth.

Motor vehicles and parts led July’s month-over-month gains at 1.6%, with furniture and home furnishings rising 1.4%, according to Commerce Department data. Analysts have long identified furniture as a lagging category due to sluggish home sales, but July’s sales of furnishings were up 5.1% from a year earlier.

Another category tied to real estate trends, building materials and garden supplies, declined 1% for the month and was down 2.6% from July 2024. Food and drinking places, where sales have held up relatively well for the past year, posted a 0.4% drop from the previous month but grew sales 5.6% from a year earlier.

The numbers arrived as the University of Michigan’s August national survey of consumer sentiment showed confidence declining for the first time in four months, due largely to inflation worries tied to trade tariffs. Preliminary scores based on several metrics put August sentiment at 58.6, down from 61.7 in July and 67.9 in August 2024. Numbers generally reflect the percentage of respondents with positive views of their household finances and the larger economy.

“Overall, consumers are no longer bracing for the worst-case scenario for the economy feared in April, when reciprocal tariffs were announced and then paused,” Joanne Hsu, the university’s consumer survey director, said in a statement. But she noted consumers expect the employment climate to deteriorate as inflation reaches 4.9% a year from now, up from 4.5% in the July survey based on median responses. The latest government data showed annual consumer inflation at 2.7% for July. 

Global medical technology provider Philips plans to invest more than $150 million in new U.S. manufacturing and research, including the expansion of a Pennsylvania plant, making it the latest among several companies expanding domestic operations in a climate of rising import tariffs.

The Netherlands-based Philips said plans are on top of a previously announced $900 million annual commitment toward U.S. investment, along with other spending being planned with partner hospitals and other medical providers. The newest investment will include expansion of its Reedsville, Pennsylvania, facility that produces artificial intelligence-enabled ultrasound systems for U.S. hospitals, expected to add 40,000 square feet of warehouse space and create 120 manufacturing jobs.

While location-based allotments and development timelines were not specified, some of the new funding will also go toward a previously announced expansion of Philips’ image-guided therapy facility in Plymouth, Minnesota, including a new med-tech training center expected to create more than 150 jobs.

“The proposed planned expansion of our manufacturing facilities is a demonstration of our deep commitment to the U.S. region,” Jeff DiLullo, chief regional leader for Philips North America, said in a statement that did not mention tariffs. 

Economic forecasters have upsized their near-term outlooks for U.S. growth in gross domestic product despite slowing in job growth and other metrics, according to the latest quarterly national survey by the Federal Reserve Bank of Philadelphia.

Economists on average expect annual GDP growth of 1.3% for the current third quarter, up from a prior estimate of 0.9% growth for the period, according to the regional Fed’s latest survey of 36 forecasters. For full-year 2025, growth is projected at 1.7%, up from 1.4% in the survey taken three months ago.

A statement from the Philadelphia Fed said the outlook incorporates forecasters’ average expectation that U.S. unemployment will register at 4.2% for full-year 2025 and 4.5% for 2026, before falling to 4.4% in 2027 and 4.3% in 2028. Three months ago, forecasters expected 4.4% unemployment by 2028. The U.S. jobless rate was 4.2% in July, according to the latest Labor Department data.