Introduction
In June, retail sales in the United States experienced a slower pace of growth. However, the overall strength of the economy remains intact, which is likely to keep the Federal Reserve at ease.
Sales Figures
According to the Census Bureau, retail sales reached $689.5 billion in June, reflecting a 0.2% increase from the previous month. This result fell short of expectations as analysts anticipated a 0.6% rise based on forecasts from FactSet. Nonetheless, it is worth noting that June’s figures were an improvement compared to negative readings observed in March and February.
Control Series Performance
The control series, which excludes sales for cars, gas, building materials, and food services, saw a 0.6% increase in June. This slight improvement exceeded the consensus forecast of 0.5% provided by FactSet.
The Economy Remains Stable
David Russell, Vice President of Market Intelligence at Trade Station, expresses cautious optimism about the state of the economy. He believes that it is progressing steadily without any signs of overheating. Americans are benefiting from relief at the gas pump while also exhibiting a moderate demand for consumer goods. These factors contribute to positive news for investors concerned about potential interest rate hikes by the Federal Reserve.
Performance by Category
When excluding sales of automobiles and gas, retail sales still increased by 0.3%, falling slightly below the projected 0.4% growth. Economists had initially anticipated that car sales would drive growth in June. Notably, sales at motor vehicle and parts dealers still showed a 0.3% increase.
The strongest performers during this period were furniture stores and electronics stores, which experienced growth rates of 1.4% and 1.1%, respectively. Clothing stores, nonstore retailers, and miscellaneous store retailers also witnessed gains in June.
Factors Affecting Consumer Behavior
Rubeela Farooqi, Chief U.S. Economist at High Frequency Economics, highlights some factors that may be influencing consumer behavior. Higher borrowing costs and elevated prices continue to present challenges for consumers. However, the current labor market conditions, positive real disposable incomes, and a gradual easing in price pressures are providing support for consumption at the moment.
Weakest Categories
Among the weakest categories in June were department stores, which experienced a decline of 2.4%. Gas stations and building material stores also faced declines of 1.4% and 1.2%, respectively. Stores selling groceries, general merchandise, sporting goods supplies, and health and personal care items also saw decreases in sales during the same period.
