US retail sales come in above expectations in June; consumer spending likely rose in Q2

The advance Census Bureau has reported that the US retail sales grew 0.6 percent on sequential basis in June. The headline print came in better than anticipated, with consensus projection at a weaker rise of 0.1 percent. But the growth comes after revising down May’s growth to 0.2 percent from the initial reading of 0.5 percent, noted TD Economics in a research report.

It would seem that consumers in the US have begun shopping again in the recent months. With the strong data for June, the second quarter sales grew 5.9 percent in annualized terms, the most rapid rate in four quarters. This indicates considerable strength in consumer spending in the second quarter that is expected to grow over 4 percent annualized, permitting the second quarter economic growth to come in at 2.5 percent, according to TD Economics.

The June figures provide a solid handoff into the third quarter, with strong job outlook, increasing wages and accumulated savings from lower gas prices underpinning consumption, added TD Economics.

Delving into June’s data, core sales, excluding sales at automotive dealers and gasoline stations, grew at a stronger rate of 0.7 percent, with a minor downward revision to May’s figure. Sales at automotive dealers and gasoline stations rose 0.1 percent and 1.2 percent month-on-month respectively. Meanwhile, sales of building materials rose 3.9 percent, whereas that of food services dropped 0.3 percent.

The control group, excluding gas, autos and building materials and food services, rose 0.5 percent in June, as compared with expectations of 0.3 percent growth.

Almost all the remaining major categories posted growth while clothing store sales fell 1 percent while electronics sales remained flat in June. Other than that, growth was quite widespread with sporting goods and non-store retailers recording strong growth of 1.3 percent each.