Commerce and NRF report lower than expected retail sales numbers for June

Momentum created by decent retail sales growth in May did not carry over into June, with sales showing unexpected declines, according to data issued today by the United States Department of Commerce and the National Retail Federation (NRF).

Commerce reported that June retail sales at $442.0 billion were down 0.3 percent from May, which was coming off of a 1.2 percent April gain. But despite the modest sequential decline, Commerce data noted that June retail sales were up 1.4 percent annually, with total retail sales from April through June up 1.7 percent compared to the same period in 2014.

The NRF reported that June retail sales, which exclude automobiles, gas stations, and restaurants, dropped 0.2 percent on a seasonally-adjusted basis, following a 0.8 percent gain in May. On an annual basis, June retail sales were up 3.1 percent on an unadjusted basis.

NRF Chief Economist Jack Kleinhenz said in a blog posting that even though this figures do not match up with current trends, it does not mean it will be an ongoing issue either.

“While consumer spending continues to be erratic and varied, going forward I expect to see improvements in retail sales, supported mostly by the U.S.’s healthy labor market, improving housing markets and easier access to consumer credit,” he noted. “Heading into the back-to-school season and through the remainder of the year, consumers should find the appetite to spend.”

He also observed that June’s results may also reflect the “deflationary environment” in the retail sector, subsequently pushing down top-line sales figures for retailers.

Heading into June, expectations for another decent month were anticipated, due to an uptick in consumer confidence numbers. The Conference Board reported that consumer confidence in June checked in at 101.4, ahead of May’s 94.6, while seeing a 17.4 percent annual gain and lending some credence to strong growth in the coming months. But June’s retail sales data did not match up with the optimistic consumer confidence data.

In a research note, IHS Global Insight Director - US & Global Consumer Economics Chris G. Christopher, Jr. explained that consumers are still cautious despite modest price inflation, relatively well received employment reports, and elevated levels of consumer confidence.

“The May and June retail sales figures taken together reveal modest American consumer spending patterns,” he said. “Consumers stayed away from shopping malls and restaurants in June. Losses were broad-based on the retail front. In May, retail gains signaled that consumers may have started using their so-called pump price dividend toward purchases of discretionary items.”