United States: Strong retail sales growth in June rounds out solid second quarter for consumer spending
July 16, 2019
Nominal retail sales rose 0.4% over the prior month in seasonally-adjusted terms in June, matching May’s revised 0.4% increase (previously reported: +0.5% month-on-month). The solid outturn surpassed market expectations of a weaker 0.1% rise and concluded an overall strong quarter of household spending in Q2, highlighting sustained consumer optimism despite signs of weakening growth elsewhere in the economy. Retail sales excluding automobiles, gasoline, building materials and food services—also known as “core” retail sales as they most closely reflect private consumption in the GDP readings—surged 0.7% month-on-month in June, up from 0.6% in May.
June’s increase came on the back of a rebound in sales of clothing; furniture; and building materials, garden equipment, and supplies, the latter of which could signal a pick-up in construction activity in the month. Moreover, sales at food and beverage stores gained momentum, while restaurant sales rose at another strong pace in June following May’s robust rise. Meanwhile, sustained sales in more discretionary spending also supported the headline figure. Retail sales of auto dealers—usually a very volatile category— had a solid showing in June, while non-store retailers, which includes e-commerce, also surged again. June’s performance came despite a sharp drop in gasoline sales, as prices at the pump fell notably during the month, but which likely freed up consumers’ discretionary income.
In annual terms, retail sales growth clocked in at 3.4% in June, up from May’s revised 2.9% (previously reported: +3.2% year-on-year). Meanwhile, annual average retail sales growth edged down to 3.8% in June from 4.0% in May.
Author: Lindsey Ice, Economist