BUSINESS-ECONOMY
US retail sales were unchanged last month as a drop in receipts at auto dealers was offset by gains elsewhere, a sign consumers remain resilient and are helping to support second-quarter economic growth. US retail sales were unchanged last month as a drop in receipts at auto dealers was offset by gains elsewhere, a sign consumers remain resilient and are helping to support second-quarter economic growth. While the retail sales figure was unchanged, it had an upward revision to 0.3 per cent for May from an originally reported flat performance, the Commerce Department said. The report did little to change expectations that the Federal Reserve would start cutting interest rates as early as September as the economy cools and inflation stays low. The report allayed fears of a sharp slowdown in the world's largest economy. "The economy is in pretty good shape, there are signs of softness around the edges where low and moderate-income consumers are pulling back. But openhanded spending by affluent consumers is keeping the economy as a whole moving forward," Bill Adams, chief economist at Comerica Bank said. The economists had expected retail sales, which are mostly goods and not adjusted for inflation, to decline 0.3 per cent, building off a previously reported 0.1 per cent gain in May. Retail sales climbed 2.3 per cent year over year in June, but it is also the slowest pace of growth since the 7.7 per cent year-to-year gain in January 2023. Consumers, suffering through a spell of high inflation, have been reaching for cheaper alternatives, earnings reports from big retailers and manufacturers showed on Thursday. Lower-income consumers were "stretched" and being very careful with their budgets to try and get by, said Ramon Laguarta, the CEO of PepsiCo Inc. Internet shopping melted 1.9 per cent in June, building on a 1.1 per cent gain in May. Sales at gasoline stations fell 3.0 per cent, which might have been because of lower nickel prices. To some degree, this reduced price of factors likely freed up cash for other expenditures. Sales at building material and garden equipment stores added 1.4 per cent, while food services and drinking places - a key measure of household spending -- rose 0.3 per cent after a 0.4 per cent advance in May. Sales at furniture stores rose 0.6 per cent, and sales at electronics and appliance stores were up 0.4 per cent. Clothing retailers, however, rose 0.6 per cent, sporting goods, hobby, musical instrument and bookstore sales edged down 0.1 per cent. Receipts at motor vehicles and parts dealers fell 2.0 percent, as a result of a cyberattack that hindered the normal running of several auto dealerships in the latter half of June at software provider CDK. Retail sales, excluding automobiles, gasoline stations, building materials, and food services, rose 0.9 per cent last month after an unrevised 0.4 per cent increase in May. Core retail sales, excluding automobiles, gasoline stations, building materials, and food services, rose 0.9 per cent last month after an unrevised 0.4 per cent rise in May. These so-called core retail sales most directly correspond to the consumer spending component of gross domestic product. Overall consumer spending, representing over two-thirds of the economy, is now expected to expand at an annualized 2.0 per cent growth rate in the second quarter of the year, up from prior expectations for a gain of 1.5 per cent. The forecast is that overall economic growth in April-June will be about a 2 per cent growth rate -- down from a 1.4 per cent increase in the first quarter. "The all-important US consumer, while increasingly discerning regarding purchases, continues to spend at a resilient pace," said Quincy Krosby, chief global strategist at LPL Financial. Consumer spending, however, appears less propitious. Most families have spent extraneous savings built up during the COVID-19 pandemic and accumulated large credit card debt, which is becoming very expensive as interest rates continue to rise. Wage growth is also slowing down, as the labour market eases. Consumer spending, nevertheless, stays brisk enough to keep expanded economic activity. A journalist, writing for the WION Business desk. Bringing you insightful business news with a touch of creativity and simplicity. Find me on Instagram as Zihvee, tr None
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