Global Economy Briefs

June Retail Sales Report Sends Mixed Messages

July 18, 2023

Retail sales rose in June in nominal terms, but less than expected. Consumer spending was up 0.2 percent month-over-month (MoM), well below the consensus expectation of 0.5 percent. Adjusted for inflation, sales were flat from May.*

These data present mixed messages about US consumers. On the one hand, the topline number came in lower than expected, but on the other hand the miss in these June data appears to be due to trends in noncore spending. Demand at gasoline stations, at car dealerships and at hardware stores was mostly disappointing for the month, but ‘Retail Control’ which exclude these volatile components, was up a robust 0.6 percent MoM. Thus, the underlying narrative appears to be one of solid spending dynamics despite the disappointing headline reading. Additionally, the Census Bureau revised May retail sales up to 0.5 percent MoM from 0.3 percent. This revision adds additional spending momentum earlier in the quarter and results in some upside to our Q2 2023 consumer spending forecast. These trends will be made clearer later this month when Personal Consumer Expenditures data, which include far more detail on services spending and inflation, are released.

 

Consumer demand for goods rose 0.2 percent in June from the month prior in nominal terms. Spending on motor vehicles and parts rose by 0.3 percent in June from May, while retail sales excluding motor vehicles rose by just 0.2 percent. Spending at gasoline stations fell 1.4 percent from the month prior due to weaker oil prices. Building materials sales Fell by 1.9 percent. Retail sales less motor vehicles, gasoline, and building supplies (known as “Retail Control”) rose by 0.6 percent from the previous month. When adjusting goods spending for CPI inflation, the real growth rate was about 0.0 percent from the previous month.*

 

Meanwhile, spending at food services and drinking places rose by 0.1 percent month-over-month in June. After adjusting for CPI inflation the real growth rate was about -0.5 percent from the previous month.*

* Real growth rates are The Conference Board estimates based on Census Retail Sales data and BLS CPI data