US retail sales fall as semiconductor shortage hits automotive sector

In our weekly Market Monday insights, Prosperity Investment Management examines the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.

Retail sales in the United States decreased in the month of July, driven by the automotive industry amid the global shortage of semiconductors.

Stunted by the global semiconductor shortage, vehicle sales have struggled in America throughout 2021 and weighed in at 3.9% lower throughout July. This is thought to be the biggest factor behind the 1.1% total drop in retail sales in the same month. However, spending increased in the hospitality sector, with restaurants and bars seeing increased footfall.

In the UK, retail sales also declined with a month of poor weather earmarked as one of the reasons for the 2.5% reduction - along with the country’s increasing number of citizens forced to self-isolate after being ‘pinged’ by the NHS COVID-19 contract tracing app. At its peak, more than 700,000 people were asked to isolate in a single week. In more positive news, new data from the Office for National Statistics revealed the unemployment rate dropped to 4.7% in the second quarter, down from 4.9% in the previous. 

Japan’s gross domestic product expanded by an annualised 1.3% in the second quarter of 2021, ahead of consensus estimates. It followed a 3.7% contraction in the first quarter of the year. Growth momentum was marginally positive despite pandemic headwinds; the main driver was domestic private demand, helped by strength in private consumption, capital spending, and residential investment. The rebound in Japan’s GDP is much weaker, however, than that seen in other developed economies, highlighting the country’s struggles to contain the pandemic.