“Following disappointing retail sales number for both April and May, or two thirds of Q2, there was hope that June would finally be the month retail sales would soar. Alas, that would not be the case, following the release of the latest retail sales data by the Department of Commerce which reported that in June retail sales rose just 0.2%, well below the 0.6% expected and matching the lowest end of the forecast expectations (from 0.2% to 1.1%).
Misses were also reported for retail sales ex-autos (0.4%, Exp. 0.5%) and ex-autos and gas (0.4%, Exp. 0.5%). Perhaps the only saving grace was the upward revision of May data from 0.3% to 0.5% for the headline number and from 0.0% to 0.3% for the ex-autos and gas. If anything, however, today’s retail sales increase which was the slowest in 5 months confirms that the trend we warned about in April, namely that the US consumer tapped out in March to fund that month’s mad spending spree, and the spending trend has been deteriorating ever since.
There was some good news in today’s report which was the retail sales control group, which rose 0.6% compared to estimates of 0.5%, and the May revision of 0.0% to 0.2% means that GDP beancounters will likely end up adding a few basis points to their Q2 GDP estimate even as consumers enter Q3 in the weakest shape they have been since the polar vortex.
Finally, the breakdown of retail sales by business was rather paradoxical….”
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