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US Retail sales data released today showed a rise in line with expectations and positive revisions to previous month numbers. According to analysts at Wells Fargo, the revisions to May were more important than the advance June data and show sales were up solidly in Q2.

Key Quotes:  

“Retail sales surged 0.5 percent in June, following a 1.3 percent gain the prior month. Sales were boosted by a 0.9 percent rise in motor vehicle sales and a huge 1.5 percent increase in sales at restaurants and bars.”

“The declines at general merchandise stores and clothing stores held core retail sales flat in June, which was well below expectations. Like the headline numbers, however, the upward revision to the May data made up for much of the shortfall, with sales revised up from a 0.5 percent to a 0.8 percent gain.”

“Of course, some of the weakness in general merchandise sales also reflects the loss of market share to online retailers. Non-store retail sales have been outpacing overall retail sales for quite some time.”

“Gasoline sales remain the elephant in the room, with sales climbing another 1.0 percent in June, driven largely by higher prices.”

We continue to look for real GDP to climb at a 4.7 percent annual rate during the quarter, driven by a 3.3 percent annualized rise in personal consumption expenditures. While it is tempting to tie the big gain in consumer spending to tax cuts, part of the second quarter’s strength reflects some catchup from the first quarter, which was negatively impacted by harsh winter weather.”