U.S. retail sales rose solidly in June, boosted by increases in purchases of motor vehicles and a range of other goods, cementing expectations for robust economic growth in the second quarter.
The Commerce Department said on Monday retail sales increased 0.5% last month. Data for May was revised higher to show a surprising sales rise of 1.3% instead of the previously reported 0.8% gain. May's rise in retail sales was the largest since September 2017.
Economists polled by Reuters had forecast retail sales rising 0.5% in June. Retail sales in June increased 6.6% from a year ago. This is the 5th straight monthly increase and puts year-over-year growth at 6.6%. That's the fastest pace of Y/Y growth since Feb. 2012.
Excluding automobiles, gasoline, building materials and food services, retail sales were unchanged last month after an upwardly revised 0.8% increase in May. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
Core retail sales were previously reported to have risen 0.5% in May.
Given the upward revision to May data, the unchanged reading in core retail sales last month likely does not change views that consumer spending accelerated in the second quarter. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, braked sharply in the January-March period, growing at its slowest pace in nearly five years.
At an industry level, the big winners were health & personal care stores (+2.2%), restaurants (+1.5%), and nonstore (mostly online shopping) (+1.3%). A few big declines during the month, including sporting goods stores (-3.2%), clothing (-2.5%), and department stores (-1.8%).
Overall though, this report puts a nice finishing touch on an impressive 2nd quarter for retail spending. FreightWaves Chief Economist, Ibrahiim Bayaan, wrote earlier in the year about the spending hangover that occurred during the 1st quarter, but it looks like the tax cuts and healthy job are keeping the retail environment strong now. This helps trucking by forcing inventory replenishment for retailers. Also, the strong online numbers help parcel carriers.
The low unemployment rate, which was 4% in June, and growing wages have buoyed consumer spending. Measures of consumer confidence have remained high in recent months, supported by continued job gains and broader economic growth.
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