Retail Sales Drop Unexpectedly, Mortgage rates end favorably.
Retail sales were surprisingly sluggish in June, according to a report released Tuesday.
U.S. food and retail sales unexpectedly dipped last month, ticking down 0.3 percent from a strong May in another sign that U.S. economic performance stalled in June.
Retail sales totaled $442 billion in June, up 1.4 percent from a year ago but shy of analysts’ expected 0.2 to 0.3 percent month-over-month growth. May’s originally reported 1.2 percent growth also was revised down to just 1 percent, according to a report released Tuesday by the Census Bureau.
Furniture and home furnishing stores saw a 1.6 percent month-over-month drop, while clothing and accessories stores shed 1.5 percent and building materials and garden equipment and supplies dealers fell 1.3 percent.
Starbucks, Wal-Mart, Microsoft Among Companies That Will Offer 100,000 Jobs for Young Adults
Electronics stores posted the report’s highest month-over-month growth with a mere 1 percent increase. Only five of the 13 major retail categories profiled saw sales increases month over month, including general merchandise stores, gas stations, health and personal care stores and sporting goods, hobby, book and music stores.
“There was weakness in a number of segments in June. Sales of motor vehicles and parts fell 1.1 percent as unit auto sales dropped, although this followed three straight months of solid gains,” Stu Hoffman, chief economist and senior vice president for The PNC Financial Services Group, wrote in a research note Tuesday, calling the overall sales performance “a disappointment.” “Even restaurant sales, which had risen for four straight months, fell in June.”
But the broader year-over-year picture isn’t nearly as bleak. Electronics and appliance stores, gas stations and building material and garden equipment and supplies dealers are the only store categories that have seen sales fall since June 2014. Auto and other motor vehicle dealers saw sales climb 7.1 percent since this time last year, while sales at food services and drinking establishments ballooned 7.7 percent.
Weak gas station sales can almost be written off on a year-over-year basis, considering the report keeps track of the total cost of gas sold and not necessarily the volume. Lower year-over-year gas prices were a surprise to no one.
5 Things to Know About the Economy This Week: 7/10/2015
But June’s relative weakness from May’s stellar report caught more than a few analysts, who were expecting modest gains, off-guard. The soft sales figures serve as another sign that the country’s economic performance has cooled.
The domestic economy created about 223,000 new positions last month, but wage growth was relatively flat and roughly 640,000 people left the labor market altogether. Consumers are unlikely to spend more without receiving more compensation from work, so underwhelming wage gains are unlikely to fuel uncharacteristic shopping sprees anytime soon, which would otherwise bolster sales figures.
And the separate Job Openings and Labor Turnover Survey released last week showed a record number of openings in May but sluggish hiring trends. The so-called JOLTS report also showed relatively weak quits numbers, suggesting workers don’t feel confident enough in the domestic economy to voluntarily leave their jobs and find alternative employment.
U.S. economic confidence in June held steady at a seven-month low, according to a recent Gallup poll. The index had climbed for six straight months in the second half of 2014 before plummeting in 2015. Only 42 percent of respondents said they thought the economy was getting better, while 53 percent said it was getting worse.
Job Openings Reach Record High in Labor Department’s JOLTS Report
A reported 29 percent of respondents described the U.S. economy as “poor,” while only 25 percent would describe it as “excellent” or even “good.”
Still, Hoffman said a soft month of data is unlikely to derail an economy that for all intents and purposes is performing admirably well, especially considering chaotic international backdrops likeGreece’s uncertainty in the eurozone and China’s turbulent stock market.
The country is continuing to add hundreds of thousands of jobs each month and is, generally speaking, in a better place than it was a year ago.
“Despite the June drop in retail sales, consumer spending growth should lead overall economic growth through the rest of 2015,” he said. “The fundamentals for consumers are solid: job growth of better than 200,000 per month, wages that are finally starting to pick up, the big drop in energy prices that has freed up cash to spend on other items, low interest rates to fund purchases of big-ticket items, and gains in household wealth from rising home values and higher stock prices.”
Article from www.usnews.com