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U.S. retail sales grow above expectations in June, consumer spending to have risen strongly in Q2

U.S. retail sales grew strongly in June, following a solid rise seen in the prior month. Sequentially, the retail sales rose 0.4 percent, coming above the consensus expectations of a rise of 0.2 percent. The print for May was slightly revised down to 0.4 percent from 0.5 percent.

The retail sales “control group”, which excludes the most volatile components – gas, autos, building materials, and food services – recorded a rise of 0.7 percent. Expectations were for a rise of 0.3 percent. The “control group” print for May was upwardly revised to 0.6 percent from 0.5 percent.

Most sub-categories saw a rise in the month, with non-store retailers leading the way with a gain of 1.7 percent. Motor vehicles and parts dealers saw a rise of 0.7 percent, while eating and drinking places recorded a growth of 0.9 percent.

Sales also rose at food & beverage, clothing and health & personal care stores, which each of them rising by 0.5 percent. Building materials and furniture also recorded a rise of 0.5 percent each. For the second quarter as a whole, furniture sales rose 8.2 percent, recovering after three straight quarters of declines.

Sales at department stores, gasoline stations and electronic stores dropped in the month, falling 1.1 percent, 2.8 percent and 0.3 percent, respectively.

The strong data released today bodes well for real consumer spending in the quarter, which is likely to have risen 4 percent in the second quarter, noted TD Economics in a research report.

“With other GDP components, like business investment and trade, downshifting on the back trade uncertainty, the onus falls on American consumers to drive economic growth. It seems that they are up to this task. With household wealth rebounding, interest rates trending lower and job and wage growth continuing unabated, fundamentals are in place for consumer spending to remain healthy”, added TD Economics.

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By Aditi Awati
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