June Retail Sales - Meeting Expectations

US retail sales met expectations in June.  This was the lowest level of increase in five months suggesting that consumer spending may be losing momentum.  In nominal terms retail spending was up 6.7% year-over-year and 0.2% month-over-month.  After adjusting for inflation, spending rose 3.2% year-over-year and 0.6% month-over-month.  Data continues to suggest K-shaped dynamics for the economy with wealthier Americans spending at faster rates while lower-income households face tighter budgets.  Fortunately, energy prices have recently retreated, however with tensions rising in the region there is a risk that they may soon rebound.

• Real (inflation adjusted) retail sales rose 3.2% year-over-year.  In June, retail sales grew 6.7% nominally netting real growth of 3.2% after adjusting for 3.5% inflation.  Higher spending at gasoline stations (+19.8%) was a key driver with additional strength from online retailers (+14.2%) and motor vehicle & parts dealers (+5.7%).  Eight of thirteen categories advanced in real terms.
• Real (inflation adjusted) retail sales rose 0.6% month-over-month.  In June, nominal retail sales levels increased 0.2% compared to May netting real growth of 0.6% after adjusting for -0.4% inflation.  Nominal growth was weighed down by reduced spending at gasoline stations (-5.3%) but was boosted by spending at online retailers (+1.9%).  Eleven of thirteen categories advanced in real terms.