US retail sales had been trending up since late 2015 but, beginning in late-2018, a series of weak or negative monthly results led to a drop-off in the annual growth rate. Subsequent sales figures formed a downtrend which brought the annual rate below 2.0% by the end of the year. Growth in the March quarter was quite strong and the June quarter has turned out to be robust as well.
According to the latest “advance” sales numbers released by the US Census Bureau, total retail sales increased by 0.4% in June, double the +0.2% which had been expected but in line with May’s revised figure of +0.4%. On an annual basis, the growth rate sped up to 3.4% from May’s revised rate of 2.9%.
NAB economist Tapas Strickland said the report’s latest figures suggest the US economy is holding up well despite trade dispute and other uncertainties. “The numbers suggest real consumer spending in Q2 could rise by up to an annualised 4.2% rate, well up from the 0.9% pace in Q1. So far it seems the industrial slowdown stemming from the trade spat is not spilling over to the larger services side of the economy for now.”
ANZ Head of FX Strategy Daniel Been agreed. “The gains were fairly broad-based with only electronics seeing a small pullback, suggesting that the consumer is alive and well.” However, he also acknowledged other economic reports were not so rosy. “Factories were looking less rosy in June though, with industrial production flat on the month, a bit weaker than expected.”