Key facts
- US retail sales increased 0.2% in June, matching expectations.
- May's retail sales gain was revised up to 1.0%.
- Sales excluding automobiles fell 0.2% in June.
- Sales excluding gasoline stations rose 0.7% in June.
- Sales excluding both autos and gasoline increased 0.4% in June.
- Initial jobless claims fell to a two-month low.
U.S. retail sales experienced a modest increase of 0.2% in June, aligning with expectations, according to the U.S. Census Bureau. This follows a revised gain of 1.0% in May. The headline figure was influenced by lower gasoline prices, which depressed receipts at service stations. However, underlying measures of consumer spending suggest more resilience. Excluding automobiles, sales declined by 0.2%, but excluding gasoline stations, sales rose by 0.7%. When both volatile categories are excluded, sales increased by 0.4%, indicating a clearer picture of consumer demand.
Households boosted purchases of motor vehicles and through online outlets, while lower gasoline prices weighed on the overall headline number. Economists emphasize that retail sales are not adjusted for inflation, meaning price changes can significantly impact the dollar value of sales. The report suggests consumers are becoming more deliberate in their spending, prioritizing value and essential purchases amidst fading tax refund tailwinds and declining real wages. Despite this, strong auto sales data indicates continued spending momentum among upper-income households.
Separate labor market data showed continued stability, with initial applications for unemployment benefits falling to a two-month low. Analysts at RBC forecast headline CPI to fall by -0.2% month-over-month in June, driven by lower gasoline prices, bringing the year-over-year rate to 3.7%. Core CPI is expected to rise 0.2% month-over-month, with the annual pace at 2.8%. Core goods prices are anticipated to remain flat, though specific tariffs could impact vehicle prices. Shelter costs are expected to remain a source of inflationary pressure throughout the year.