U.S. Energy Product Prices Strengthen

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.

Total business inventories rose 0.3% (5.3% y/y) during May following an unrevised 0.5% April gain. Total business sales rose 0.2% (1.5% y/y) following an unrevised 0.2% decline. The inventory-to-sales (I/S) ratio held steady at an unrevised 1.39. Business inventory swings can have a meaningful impact on GDP. In 1Q'19 inventories added 0.6 percentage point to GDP growth following a 0.1 point addition to 4Q'18 growth.

Retail inventories increased 0.4% (4.7% y/y) in May after rising 0.6% during April. Auto inventories, which comprise roughly 35% of retail inventories, grew 0.7% (7.7% y/y). Non-auto retail inventories rose 0.3% (3.0% y/y). General merchandise inventories, the second largest sector fell 0.4% (-0.0% y/y). Department store inventories, a subset of general merchandise, moved 0.3% lower (-8.4% y/y) as clothing & accessory store inventories ticked 0.1% higher (0.8% y/y). Factory sector inventories gained 0.2% (3.6% y/y). As reported last week, wholesale inventories rose 0.4% (7.7% y/y).

Retail sales increased 0.3% in May (2.7% y/y, with non-auto sales growing 0.2% (2.6% y/y). Wholesale sector sales edged 0.1% higher (0.4% y/y), while shipments from the factory sector also rose 0.1% (1.4% y/y).

The inventory-to-sales ratio in the retail sector was unchanged at 1.46. The non-auto I/S ratio also was stable at 1.20, above the historic low of 1.17 reached in November 2018 (data goes back to 1967). The wholesale and factory sector I/S ratios edged up to 1.35 and 1.38 respectively.

The manufacturing and trade data are in Haver's USECON database.