EmailThe June Retail Sales report was a true disappointment almost from top to bottom. There were declines in most categories, suggesting clear signs of spending caution on the part of consumers who have been unnerved by the macro headlines and indications of a softening labor market. Strikingly, retail sales declined 0.5% in June versus the Briefing.com consensus estimate, which called for a 0.2% increase. Excluding autos, retail sales declined 0.4%, which was also well of the consensus mark calling for a 0.1% increase.
A 0.6% decline in motor vehicle sales seemed to be an oddity after taking into account the jump in auto sales in June to a 14.0 mln SAAR from 13.8 mln SAAR in May. In any event, the decline here is something many economists were not expecting. Notable declines were also seen in key discretionary spending areas: furniture and home furnishing stores (-0.8%), electronics and appliance stores (-0.8%), building material and garden equipment and supplies dealers (-1.6%), health and personal care stores (-0.7%), sporting goods, hobby, book and music stores (-1.6%), general merchandise (-0.2%), and food service and drinking places (-0.2%). Gasoline station sales were down 1.8% in June after declining 2.0% in May. The drop here reflects the impact of lower gasoline prices, which has been helpful for the consumer. Nonetheless, the drop in spending in the aforementioned categories can be regarded as the more important takeaway from the June report. Core retail sales, which exclude gasoline station, auto, and building materials sales, declined 0.1%. That is a negative input for the PCE component of Q2 GDP.
