Retail sales beat market expectations in June

Retail sales were flat in month-on-month seasonally adjusted terms in June, which contrasted May's 0.3% increase but beat expectations for a decline. June's slowdown was largely due to deteriorations in motor vehicle and parts dealers, and gasoline stations sales. In contrast, food and beverages and non-store retailers sales improved. On an annual basis, retail sales rose 2.3% in June, which was below May’s 2.6% expansion. Meanwhile, the trend improved, with the annual average growth of retail sales coming in at 3.0%, up from May's 2.9%.

Together with growth in private consumption of goods and services in April and May, June’s retail sales data suggests a solid private consumption outturn in Q2 as a whole, in line with our panelists’ forecasts.

TD Economics’ Shernette McLeod said: “All said, retail sales did stage a modest rebound in the second quarter, up 2.2% q/q (annualized) from a -0.8% (annualized) decline last quarter.” Nomura analysts said: “We revised up our Q2 GDP tracking estimate to 2.4% q-o-q a.r. from 2.0% previously, reflecting stronger consumption. Core retail sales and sales at food services and drinking places both grew more than we expected in June. In addition, upward revisions to April and May core retail sales and food services sales were positive.”

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