Retail Sales Disappointed Once Again in June

The U.S. consumer appears to be more cautious than we would expect, with disappointing retail sales figures once again in June, falling for the second straight month, according to the Census Bureau. Spending at retailers were off by 0.2 percent in June, extending the 0.1 percent declines seen in May and below consensus estimates for a slight gain. (On the positive side, the May number was revised higher, as it was originally down by 0.3 percent.) Americans had been more willing to open their pocketbooks, especially relative to the caution seen at the beginning of 2016. This culminated in 5.6 percent year-over-year growth in January, its fastest pace since March 2012, but the year-over-year rate has eased since then. Since June 2016, retail spending has increased by a more modest 2.8 percent. Excluding autos, the year-over-year pace was 2.4 percent.

Looking at the June report, the data were mixed. Businesses with increased sales for the month included building materials and garden supply stores (up 0.5 percent), general merchandise stores (up 0.4 percent), nonstore retailers (up 0.4 percent) and health and personal care stores (up 0.3 percent), among others. In contrast, there was reduced spending seen in the following segments: miscellaneous store retailers (down 3.1 percent), gasoline stations (down 1.3 percent), department stores (down 0.7 percent), food services and drinking places (down 0.6 percent), sporting goods and hobby stores (down 0.6 percent) and food and beverage stores (down 0.4 percent).

Since June 2016, the largest gains in retail spending were for nonstore retailers (up 9.2 percent), building material and garden supply stores (up 5.1 percent), motor vehicles and parts dealers (up 4.7 percent) and furniture and home furnishings stores (up 2.5 percent). At the same time, there were significant year-over-year declines for sporting goods and hobby stores (down 8.9 percent) and department stores (down 3.9 percent). It is worth noting the contrast between nonstore retailers and department stores in this report, as retailers continue to grapple with the structural shifts taking place between online and brick-and-mortar spending habits.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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