The Census Bureau reported that retail sales rose 0.4 percent in June, building on the gains of the previous two months. One of the components of this measure that rose the fastest was motor vehicles, up 1.8 percent for the month. Despite some weaknesses in auto sales earlier this year, retail spending at auto dealers is up 4.8 percent so far in the first six months of the year. On a year-over-year basis, the sector is up 11.4 percent. This is important, because if you exclude motor vehicles from the analysis, retail sales in June would have been unchanged.
One of the other categories lifting the retail sales figure higher in June was gasoline station spending, up 0.7 percent for the month. Petroleum costs have been quite volatile in the past few months, resulting in significant swings in gasoline prices. This has produced ups-and-downs in retail spending for gasoline stations, as well, with declines in March and April followed by gains in May and June. If both autos and gasoline station sales were omitted, retail sales would have fallen by 0.1 percent. This suggests that the larger economy still suffers from some weaknesses in terms of spending.
Many of the other categories of spending were mixed. Areas with increases in purchasing in June included furniture and home furnishings (up 2.4 percent), nonstore retailers (up 2.1 percent), clothing and accessories (up 0.7 percent), and sporting goods and hobbies (up 0.7 percent). On the other hand, there were weaknesses among building materials (down 2.2 percent), food service and drinking places (down 1.2 percent), department stores (down 1.0 percent), electronics and appliances (down 0.1 percent), and food and beverage (down 0.1 percent) retailers.
Overall, it is clear that consumer spending growth remains subpar, with increases isolated to certain key areas. The consensus had been for retail spending growth that was nearly double this amount. Even with retail sales up 5.7 percent in the past 12 months, it appears that Americans continue to be selective in where they spend their dollars, dampening overall consumer demand.
Chad Moutray is the chief economist, National Association of Manufacturers.
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