Thursday, November 7, 2024

Retail sales rose for the third month in a row in June


Washington DC
CNN

Spending at U.S. retailers rose for the third month in a row in June, as U.S. consumers eased the slack.

Retail spending, which is adjusted for seasonality but not inflation, rose 0.2% in June, the Commerce Department said on Tuesday. It’s a slow pace than the previous month’s revised 0.5% increase And according to Refinitiv, a 0.5% profit was below economists’ expectations.

Furniture sales rose 1.4% in June from the previous month, while spending at department stores fell 2.4%. Excluding gas stations and sales of cars and parts, retail sales rose 0.3% in June from May. Overall retail sales rose 1.5% in June from a year earlier, the second weakest pace since May 2020.

The figures add to signs that U.S. consumers are still opening their wallets amid high interest rates, stubborn inflation and lingering economic uncertainty.

“Consumer spending is being affected by the depletion of excess savings built up during the Covid period,” Ian Shepherdson and Kieran Clancy of Pantheon Macroeconomics wrote in an analyst note. “From a peak of $90B last summer, we estimate that student loan repayments have slowed since September to $70B in May. Gives an extra kick.”

Retail sales feed into the broader consumer spending figures, which account for two-thirds of economic output. Consumer spending may have picked up in the second quarter, albeit at a slower pace than the first three months of the year.

Spending figures are heavily influenced by the state of the labor market, which has cooled gradually in recent months. Employers added 209,000 jobs in June, nearly 100,000 positions stronger than May’s expected 306,000 and the smallest monthly gain since a decline in December 2020. The job market remains strong by historical standards.

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The Federal Reserve is trying to cool the economy to reduce inflation, so a steady slowdown in spending is viewed favorably by officials — as long as it lasts. And there are plenty of signs that spending will continue to lose steam.

“While consumers are still spending, they are acting more prudently as prolonged inflation and the Federal Reserve’s tightening cycle take their toll,” Lydia Bousseur, senior economist at EY-Parthenon, wrote in an analyst note. “As employment and household disposable income growth are expected to moderate in the second half of the year, a slowdown in consumer spending will increase, excess savings will shrink, student loan repayments will resume and credit conditions will tighten further.”

Central Bank Officers See you at the end of this month It is widely expected to be a quarter point interest rate hike to consult their latest monetary policy decision. Officials have clarified There is still work to be done This year could mark an additional quarter-point hike, according to the central bank’s latest economic projections, to ensure the defeat of inflation. Some officials have already indicated that a second hike in September would be a good idea.

A continued strong economy coupled with an even stronger labor market will make officials very uncomfortable. But fortunately for the Fed, US consumers look set to face a tougher economic landscape later this year, prompting them to cut back dramatically.

The Commerce Department will release its first estimate of second-quarter gross domestic product on July 27.

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