| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Retail Sales - M/M | 0.1% | -0.2% to 0.3% | 0.6% | -0.9% | |
| Ex-Vehicles - M/M | 0.3% | 0.1% to 0.5% | 0.5% | -0.3% | -0.2% |
| Ex-Vehicles & Gas - M/M | 0.1% | 0.1% to 0.2% | 0.6% | -0.1% | 0.0% |
Highlights
There was a stronger-than-expected recovery in U.S. consumer spending in June, although not enough to offset May's decline in consumption. The underlying data, however, show enough resilience for Federal Reserve officials to remain patient regarding the timing of the next rate cut.
U.S. June retail sales jumped by 0.6 percent, partially rebounding from the unrevised 0.9 percent monthly drop reported for May, and much greater than the +0.1 percent consensus in the Econoday survey of forecasters.
Core retail sales, removing autos and gasoline sales, also increased 0.6 percent last month following a revised flat reading in May (previously reported as -0.1 percent). Core retail sales are up 4.1 percent on an annual basis in June compared to a 4.6 percent y/y jump in May.
Auto sales rose 1.2 percent in June, not enough to erase May's 3.8 percent decline, but is up 6.5 percent vs. last year. Activity appears to be recovering after dwindling following the pre-tariffs spike in March.
Summer spending is solid, not robust, with building materials, garden equipment and suppliers' sales up 0.9 percent in June, while restaurants and bars' sales increased 0.6 percent (and +6.6 percent from June 2024).
E-commerce sales slowed down to a 0.4 percent increase in June from +0.6 percent in May, and they are 4.5 percent higher than a year ago.
Compared to a year ago, June retail sales are up 3.9 percent, compared to May's 3.3 percent jump.
Excluding gasoline, retail sales increased 0.7 percent, falling after May's 0.8 percent drop, and jumped 4.6 percent from June 2024 vs. +4.0 percent on an annual basis in May.
Stripping out purchases of motor vehicles and parts, sales rose 0.5 percent compared to 0.2 percent drop (previously -0.3 percent) in May. On an annual basis, retail sales ex-autos are up 3.3 percent, a slowdown from May's 3.6 percent pace.
U.S. June retail sales jumped by 0.6 percent, partially rebounding from the unrevised 0.9 percent monthly drop reported for May, and much greater than the +0.1 percent consensus in the Econoday survey of forecasters.
Core retail sales, removing autos and gasoline sales, also increased 0.6 percent last month following a revised flat reading in May (previously reported as -0.1 percent). Core retail sales are up 4.1 percent on an annual basis in June compared to a 4.6 percent y/y jump in May.
Auto sales rose 1.2 percent in June, not enough to erase May's 3.8 percent decline, but is up 6.5 percent vs. last year. Activity appears to be recovering after dwindling following the pre-tariffs spike in March.
Summer spending is solid, not robust, with building materials, garden equipment and suppliers' sales up 0.9 percent in June, while restaurants and bars' sales increased 0.6 percent (and +6.6 percent from June 2024).
E-commerce sales slowed down to a 0.4 percent increase in June from +0.6 percent in May, and they are 4.5 percent higher than a year ago.
Compared to a year ago, June retail sales are up 3.9 percent, compared to May's 3.3 percent jump.
Excluding gasoline, retail sales increased 0.7 percent, falling after May's 0.8 percent drop, and jumped 4.6 percent from June 2024 vs. +4.0 percent on an annual basis in May.
Stripping out purchases of motor vehicles and parts, sales rose 0.5 percent compared to 0.2 percent drop (previously -0.3 percent) in May. On an annual basis, retail sales ex-autos are up 3.3 percent, a slowdown from May's 3.6 percent pace.
Market Consensus Before Announcement
Retail sales have slowed as consumers remain wary. The consensus looks for sales up 0.1 percent in June with sales ex-autos up 0.3 percent and ex-autos and gas up 0.1 percent.
Definition
Retail sales measure the total receipts at stores that sell merchandise and related services to final consumers. Sales are by retail and food services stores. Data are collected from the Monthly Retail Trade Survey conducted by the U.S. Bureau of the Census. Essentially, retail sales cover the durables and nondurables portions of consumer spending. Consumer spending typically accounts for about two-thirds of GDP and is therefore a key element in economic growth. Of special attention is the control group; this is an input into the consumer spending component of GDP and excludes food services, autos, gasoline and building materials.
Description
Consumer spending accounts for more than two-thirds of the economy, so if you know how the consumer sector is faring, you'll have a pretty good handle on where the economy is headed. Needless to say, that's a big advantage for investors.
The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth becomes excessive and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth. Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps auto sales are especially strong or apparel sales are showing exceptional weakness. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.
Balance was achieved through much of the nineties. For this reason alone, investors in the stock and bond markets enjoyed huge gains during the bull market of the 1990s. Retail sales growth did slow down in tandem with the equity market in 2000 and 2001, but then rebounded at a healthy pace between 2003 and 2005. By 2007, the credit crunch was well underway and starting to undermine growth in consumer spending. Later in 2008 and 2009, the rise in unemployment and loss of income during the recession also cut into retail sales. Spending rebounded in 2010 and 2011 but was constrained by lingering high unemployment.
Importance
Retail sales are a major indicator of consumer spending trends because they account for nearly one-half of total consumer spending and approximately one-third of aggregate economic activity. The control group for retail sales (which excludes restaurants, vehicles, gasoline and building materials) is an input into GDP and offers a narrower look at nondiscretionary spending.
Interpretation
Strong retail sales are bearish for the bond market, but favorable for the stock market, particularly retail stocks. Sluggish retail sales could lead to a bond market rally, but will probably be bearish for the stock market.
Retail sales are subject to substantial month-to-month variability. In order to provide a more accurate picture of the consumer spending trend, follow the three-month moving average of the monthly percent changes or the year-over-year percent change. Retail sales are also subject to substantial monthly revisions, which makes it more difficult to discern the underlying trend. This problem underscores the need to monitor the moving average rather than just the latest one month of data.
In an attempt to avoid the more extreme volatility, economists and financial market participants monitor retail sales less autos (actually less auto dealers which include trucks, too.) Motor vehicle sales are excluded not because they are irrelevant, but because they fluctuate more than overall retail sales. In recent years, many analysts consider the core series to be total less autos and less gasoline service station sales. The latter is volatile due to swings in oil and gasoline prices.
Price changes affect the real value of retail sales. Watch for changes in food and energy prices which could affect two large components among nondurable goods stores: food stores and gasoline service stations. Large declines in food or energy prices could lead to declines in store sales which are due to price, not volume. This would mean that real sales were stronger than nominal dollar sales.
Since economic performance depend on real, rather than nominal growth rates, compare the trend growth rate in retail sales to that in the CPI for commodities.
The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth becomes excessive and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth. Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps auto sales are especially strong or apparel sales are showing exceptional weakness. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.
Balance was achieved through much of the nineties. For this reason alone, investors in the stock and bond markets enjoyed huge gains during the bull market of the 1990s. Retail sales growth did slow down in tandem with the equity market in 2000 and 2001, but then rebounded at a healthy pace between 2003 and 2005. By 2007, the credit crunch was well underway and starting to undermine growth in consumer spending. Later in 2008 and 2009, the rise in unemployment and loss of income during the recession also cut into retail sales. Spending rebounded in 2010 and 2011 but was constrained by lingering high unemployment.
Importance
Retail sales are a major indicator of consumer spending trends because they account for nearly one-half of total consumer spending and approximately one-third of aggregate economic activity. The control group for retail sales (which excludes restaurants, vehicles, gasoline and building materials) is an input into GDP and offers a narrower look at nondiscretionary spending.
Interpretation
Strong retail sales are bearish for the bond market, but favorable for the stock market, particularly retail stocks. Sluggish retail sales could lead to a bond market rally, but will probably be bearish for the stock market.
Retail sales are subject to substantial month-to-month variability. In order to provide a more accurate picture of the consumer spending trend, follow the three-month moving average of the monthly percent changes or the year-over-year percent change. Retail sales are also subject to substantial monthly revisions, which makes it more difficult to discern the underlying trend. This problem underscores the need to monitor the moving average rather than just the latest one month of data.
In an attempt to avoid the more extreme volatility, economists and financial market participants monitor retail sales less autos (actually less auto dealers which include trucks, too.) Motor vehicle sales are excluded not because they are irrelevant, but because they fluctuate more than overall retail sales. In recent years, many analysts consider the core series to be total less autos and less gasoline service station sales. The latter is volatile due to swings in oil and gasoline prices.
Price changes affect the real value of retail sales. Watch for changes in food and energy prices which could affect two large components among nondurable goods stores: food stores and gasoline service stations. Large declines in food or energy prices could lead to declines in store sales which are due to price, not volume. This would mean that real sales were stronger than nominal dollar sales.
Since economic performance depend on real, rather than nominal growth rates, compare the trend growth rate in retail sales to that in the CPI for commodities.
