American consumers largely stayed home in June, spending less on restaurants and clothing but continuing to replace their aging cars with newer models.
Retail sales rose 0.4% last month, according to the Commerce Department, half the 0.8% forecast from the Reuters poll of economists. It was the third month in a row of positive sales and the eleventh of the last twelve. The annual rate jumped to 5.7% in June from 4.4% the previous month.
All of the monthly increase came from automobile purchases, excluding those, sales were flat, well below the 0.5% forecast. The May sales figure was revised down to 0.5% from 0.6%. Retail sales without autos and gasoline fell 0.1%, also missing its 0.4% forecast.
The so-called 'control group’ or ‘core sales', the formulation most closely matching the consumption component of GDP, which is about 70% of overall economic activity, gained 0.1% on expectation for a 0.3% increase. The May score was revised lower to 0.2% from 0.3%.
Restaurant and bar receipts fell 1.2% in June, the biggest drop since February 2008. Building materials sales slid 2.2% the most since last May and department stores generated 1.0% fewer sales in June.
Eight of 13 major sales categories rose, the largest a 1.8% gain at automobile dealerships. Purchases of furniture and home furnishings climbed 2.4%, the most since May 2012.
Service station sales rose 0.7% in June after May’s 0.4% boost, probably a note on the beginning of the summer driving season as gasoline prices were essentially flat, averaging $3.595 for a gallon of regular gasoline in June and $3.592 in May.
Cars and light trucks sold at a 15.89 million unit annual pace in June, the best rate since November 2007.
The economy is predicted to grow at a 2.3% in the third quarter, after expanding at a 1.8% pace in the first quarter and a projected 1.6% rate in the second.
Chief Market Strategist