June 2013 US Retail Sales Update

Recent retail sales data suggest regular volatility rather than economic weakness.

Advance retail sales rose +0.4% m/m (+5.7% y/y) in June—behind expectations, but still growth. In our view, the report likely reflects normal monthly volatility, not a trend of weakening consumer spending. Headline and core retail sales are actually at all-time highs and rising (Exhibit 1).

On a monthly basis, underlying results were overall mixed, with big-ticket items particularly strong: Sales at auto dealers (2.4%) and furniture stores (2.4%) grew nicely, but this was partly offset by weakness at building materials (-2.2%), department stores (-1.0%), miscellaneous retailers (-2.5%) and food services & drinking places (-1.2%). Overall, the mixed results seem fairly typical of mid-year retail sales, which tend to be weak even with seasonal adjustments. Yearly numbers are more telling, and y/y growth in headline and core sales accelerated (Exhibit 2), suggesting spending is still growing at a decent clip.

Exhibit 1: US Retail Sales Volume (Nominal)

Source: US Census Bureau, Thomson Reuters. Data retrieved 7/15/2013.

Exhibit 2: US Advance Retail Sales (M/M and Y/Y Growth)

Source: US Census Bureau, Thomson Reuters. Data retrieved 7/15/2013.

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