Retail sales rebound in June
Retail sales in the United States rebounded in June. Demand remains strong despite the shift from goods to services and travel and lower auto sales.
The Commerce Department said on Friday that retail sales rose 0.6% last month. Meanwhile, officials downgraded May data to show sales fell 1.7% from 1.3% as previously reported. Sales exceeded economists’ expectations of a 0.4% drop in June.
June sales totaled $ 621.3 billion, up 18% from June 2020, the department reported, showing resilience among consumers despite the increase in COVID-19 cases. Economists said sales were also boosted by rising prices amid supply constraints.
Wells Fargo Securities economists said the country continues to face growing challenges over demand exceeding supply in many categories, from automobiles to building materials. The report also indicated some shifts in spending from electronics and groceries to travel and entertainment.
“Last summer, parents were trying to get their hands on basketball hoops and trampolines and spending more time working in the yard or fixing the house,” said Tim Quinlan, senior economist at Wells Fargo. “This summer, the kids are heading back to camp where the family is ready to hit the road. “
Consumer confidence remains high according to the University of Michigan confidence index in July, which stood at 80.8. The level is high despite falling from 85.5 in June as price inflation rose.
Moody’s economist Scott Hoyt said consumers have plenty of cash on hand and use credit cards less often. He said savings levels are higher than they have been in years, and rising house prices are also improving consumers’ balance sheets.
The report showed that auto dealer sales fell 2% in June, after falling 4.6% in May. Clothing sales rose 2.6% and are expected to be higher throughout the summer as consumers return to workplaces and schools this fall. Sales at gasoline stations also rose, as did restaurants and bars, up 2.3% in June from the previous month. Year over year, restaurant sales increased 40%.
“As back to school approaches, we expect record sales as families shop for electronics, shoes and backpacks for in-person learning this year,” said Matthew Shay, president of the National Retail Federation.
Unadjusted online sales in June totaled $ 85.1 billion, up 1.2% from the previous month. Online sales jumped 11.9% from June 2020.
“The economy and consumption are particularly sensitive to government policy, and the boost we saw from government support earlier in the year continues to bear fruit,” said Jack Kleinhenz, chief economist of the National Retail Federation.
He said the reopening of stores and the overall economy had made progress. While the higher prices in some retail categories reflect supply chain constraints, he said this has not proven to be a deterrent to spending.
“As more people get vaccinated and come out, some of the growth will shift to services rather than retail, but there is enough momentum to support both.” Kleinhenz said.