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Economy in Brief

U.S. Retail Sales Exhibit Unexpected Strength
by Tom Moeller  July 16, 2019

Improvement in consumer spending continues to underscore the economic expansion. Total retail sales increased 0.4% (3.4% y/y) during June following a 0.4% May gain, revised from a 0.5%. April's increase was revised also to 0.4% from 0.3%. A 0.2% June gain had been expected in the Action Economics Forecast Survey. Retail sales excluding motor vehicles and parts also rose 0.4% (3.3% y/y) for the second straight month. May's increase was revised from 0.5%. A 0.1% uptick had been expected.

During June, sales of motor vehicle & parts increased 0.7% (4.1% y/y) for a second straight month. This compared to a 0.7% m/m easing in unit sales of motor vehicles.

A measure of the underlying pace of retail spending is nonauto sales growth excluding gasoline and building materials. These sales rose 0.7% (3.2% y/y) and built upon a 0.6% gain in May and a 0.5% April increase.

Growth in sales was broad-based last month. Purchases via the internet strengthened 1.7% (13.4% y/y) for a second straight month. Furniture & home furnishing store sales improved 0.5% (0.2% y/y) following a 0.1% easing. Purchases at building materials & garden equipment stores also rose 0.5% (-2.5% y/y) following two months of decline. Apparel & accessory store buying rose a similar 0.5% (-0.9% y/y) on the heels of a 0.2% dip. General merchandise stores gained 0.2% (2.5% y/y) for a second consecutive month. Showing weakness were purchases at sporting goods, hobby, book and music stores which held steady (-3.3% y/y) after a 0.1% dip. Also weakening were sales at electronics & appliance stores which fell 0.3% (-5.0% y/y) following a 0.8% rise.

Also moving lower by 2.8% (-1.7% y/y) were gasoline service station sales, as prices fell.

Sales of nondiscretionary items improved last month. Food & beverage store sales increased 0.5% (2.9% y/y) after a 0.1% rise. Health & personal care product store sales also rose 0.5% (5.5% y/y) after moving 0.9% higher in May.

Restaurant & drinking establishment sales increased 0.9% last month (4.0% y/y) after four months of strong gains.

The retail sales data can be found in Haver's USECON database. The Action Economics forecast is in the AS1REPNA database.

Retail Spending (% chg) Jun May Apr Jun Y/Y 2018 2017 2016
Total Retail Sales & Food Services 0.4 0.4 0.4 3.4 4.9 4.2 3.0
  Excluding Autos 0.4 0.4 0.6 3.3 5.5 4.6 2.6
Retail Sales 0.4 0.3 0.3 3.3 4.7 4.0 2.7
  Motor Vehicle & Parts 0.7 0.7 -0.4 4.1 2.6 2.8 4.4
 Retail Less Autos 0.2 0.2 0.5 3.1 5.3 4.4 2.1
  Gasoline Stations -2.8 -0.8 1.6 -1.7 12.9 8.2 -5.7
Food Service & Drinking Places Sales 0.9 1.0 0.7 4.0 6.4 5.5 5.5
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