US retail sales surged 1.7% last month following a decline in May that was revised slightly shallower to -0.3%. Consensus expectations had been for a 1.0% increase. Sales excluding motor vehicles rose 0.7% and followed an upwardly revised no change in May. Consensus expectations had been for a 0.5% increase.

Sales at gasoline service stations rose 1.9% despite lower gas prices. Nonauto retail sales less gasoline rose 0.6% (7.3% y/y) following a 0.1% up tick in May.

During the last ten years there has been a 54% correlation between the level of Consumer Sentiment and the y/y change in nonauto retail sales less gasoline.

Spending on discretionary items was firm. Sales at furniture & electronics stores rose 0.6% (4.6% y/y) and general merchandise store sales jumped 1.2% (8.1% y/y). Apparel store sales recovered the prior month's decline and jumped 1.0% (7.6% y/y).

Building material store sales rose a modest 0.2% (9.3% y/y) following three months of firm gain.

Sales of nonstore retailers (internet and catalogue) more than reversed the prior month's drop and surged 1.7% (11.9% y/y).