June retail sales head up, reports Commerce and NRF

United States June retail sales saw slight gains, according to data respectively issued today by the U.S. Department of Commerce’s U.S. Census Bureau and the National Retail Federation (NRF).

Commerce reported that June retail sales—at $689.5 billion—rose 0.2% over May and saw a 1.5% annual increase. Total retail sales, from May through June, headed up 1.6% compared to the same period a year ago.

Retail trade sales saw a 0.2% gain over May and a 0.5% annual gain, with non-store retailers, which includes e-commerce, up 9.4% annually, and food services and drinking places up 8.4% annually.

NRF reported that June retail sales, which does not include automobile dealers, gasoline stations, and restaurants, were up 0.4%, from May to June and were up 3.3% on an unadjusted basis annually, following May’s 0.4% sequential increase and 4.4% annual increase. And NRF reported that for the three-month period through May, retail sales increased 3.1% on an unadjusted annual basis, with total retail sales up 4% annually on a year-to-date basis through June.

“The pace of spending is slower, but consumers are still in control of the direction of the economy thanks to the still-growing labor market and a comfortable cushion of savings,” NRF Chief Economist Jack Kleinhenz said in a statement. “Jobs aren’t growing as fast as they were, but employment is by no means in a slump, and if consumers have jobs, they have the willingness to spend. On average, consumer balance sheets remain sturdy and they have the wherewithal to support spending for most of the rest of the year. That’s thanks, in part, to excess savings built up during the pandemic along with easing inflation.”

NRF data pointed to June retail sales gains in six of the nine retail sectors it tracks, including:
-Online and other non-store sales were up 1.9% month over month seasonally adjusted and up 9.9% unadjusted year over year;
-Health and personal care stores were up 0.1% month over month seasonally adjusted and up 6.6% unadjusted year over year;
-Electronics and appliance stores were up 1.1% month over month seasonally adjusted and up 1.8% unadjusted year over year;
-General merchandise stores were down 0.1% month over month seasonally adjusted but up 1.4% unadjusted year over year;
-Clothing and clothing accessory stores were up 0.6% month over month seasonally adjusted and up 1.3% unadjusted year over year;
-Grocery and beverage stores were down 0.7% month over month seasonally adjusted but up 1.3% unadjusted year over year;
-Sporting goods stores were down 1% month over month seasonally adjusted and down 0.9% unadjusted year over year;
-Furniture and home furnishings stores were up 1.4% month over month seasonally adjusted but down 3.6% unadjusted year over year; and
-Building materials and garden supply stores were down 1.2% month over month seasonally adjusted and down 3.7% unadjusted year over year

Neil Saunders, Managing Director of GlobalData, wrote in a research note that while June saw growth, it is concerning that as inflation drops, spending on more discretionary goods is not picking up.

“In theory, the sharp decline in gas prices and lower inflation in food, should relax the pressure on household finances and give people more room to indulge,” he wrote. “In the numbers and all our data, we do not see this happening to any great degree. Consumers are far from depressed, but neither are they in celebratory mood. An air of caution pervades society and people are still in the mode of being careful about what they buy and trying to stick to set budgets.”

Saunders also observed that at the halfway point of 2023, the retail economy is holding up reasonably well.

“There has been a slowdown in growth and there is pressure on profits and margins,” he said. “However, a retail recession has been avoided. All the indicators point to more of the same in the second half of the year.”

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