June Retail Sales

The Census Bureau reported retail sales rose a disappointing 0.2% in June; a more robust 0.6% jump had been penciled in by consensus.  That said, revisions carried the day.  May now reflects a 0.5% jump versus the 0.3% originally published, matching the April hike.  Over the past year, retail sales have shown a 4.3% gain.

Atlas likes to watch a core retail sales number which subtracts motor vehicle and gas sales since the big ticket nature of the former can combine with the occasional random volatility of energy prices in a way that causes the headline number to move erratically.  This core figure rose 0.4% in June.  The May figure was also revised upward to show a 0.3% gain from no change the prior month.  While both numbers are increasing, there seems to be some disappointment that they weren’t stronger yet.  Hopes have been building that growth in this year’s second quarter would rebound strongly from the weak first, compensating for what was seen as a weather induced contraction in the year’s first three months.  Some analysts are now questioning the validity of that excuse since a sluggish pace of improvement seems to be the best our economy can produce.

We consider this monthly retail sales report to be one of the more important data points Atlas tracks.  It accounts for a substantial portion of monthly consumption and tends to be an excellent indicator of future trends.  We will have to settle for the positive bias the numbers show, while reserving some caution as to their magnitude.    (by J R)