June retail sales data from Commerce and NRF impresses

June retail sales data issued by the United States Department of Commerce and the National Retail Federation (NRF) saw annual gains in closing out the first half of 2016.

Commerce reported that June retail sales at $457.0 billion were up 0.6 percent compared to May and up 2.7 percent annually, following a 0.5 percent April to May increase and a 1.3 percent March to April gain. Total retail sales from April to June were up 2.6 percent compared to the same period a year ago.

The NRF reported that retail sales saw a 5.1 percent annual gain in June, up from May’s 3.2 percent improvement. And it added that retail sales were up 0.8 percent unadjusted over May, with the three-month moving average up 3.8 percent annually on an unadjusted basis.

“June’s retail sales grew at a solid pace on the heels of a strong showing for both May and April,” NRF Chief Economist Jack Kleinhenz commented in a blog posting. “Consumer spending rebounded strongly in the second quarter after two weak previous quarters. Additional job gains and rising wages are supporting the strength in retail sales and should provide momentum going into the second half of 2016. The bottom line is that today’s data shows that the consumer sector remains a visible and healthy force in the economy and is expected to fuel growth in the second half of 2016.”

Earlier this year, the NRF said it is calling for 2016 retail industry sales, excluding automobiles, gas stations, and restaurants, to see a 3.1 percent annual increase.

While this estimate comes in higher than the 10-year average of 2.7 percent, it falls short of the NRF’s 2015 estimate of 4.1 percent. The Washington, D.C.-based organization also said it expects non-store sales to grow between 6-9 percent in
2016.

The NRF offered up some other metrics that it maintains point to a strong 2016 on the retail sales front, including:
-2016 economic growth to be in the 1.9 percent-to-2.4 percent range; and
-an estimated 190,000 new jobs added per month, which is off from 2015 but consistent with a growing labor market

Even though retail sales activity saw gains in June, that has not been fully reflected in the freight transportation and logistics sectors, which remain hampered by low demand and declining volumes to a large degree, as has been the case in previous months.

IHS Director of Consumer Economics Chris Christopher, Jr. was bullish on June’s retail sales data.

“It is beyond a doubt that consumers have shaken off their winter blues,” he wrote in a research note. “Spending gains were broad-based and despite rising gasoline prices, consumers are opening their wallets. In April, consumers came out swinging after a lackluster first quarter. They moved forward again in May, and then surged again in June.”

Hackett Associates Founder Ben Hackett wrote in the June edition of the Port Tracker report his firm co-publishes with the NRF that with retail sales being positive, with consumers continuing to cautiously spend the rate of economic growth is among the weakest levels recorded going back to the height of the financial crisis in 2008-2009.