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Retail Sales Remain Healthy Despite Disappointing Apparel Performance

Retail sales continued on an upward path in June.

The U.S. Census Bureau reported retail sales in June reached $506.8 billion, an increase of 0.5% over the previous month and 6.6% above June 2017. Total sales for the quarter reflected a 5.9% increase over the same period last year.

The government also revised the May sales data up to 1.3% from the previously reported 0.8%.

The National Retail Federation, which publishes its own retail sales data based on the Census information, reported a 0.07% month-to-month increase for June over May, which it said was up 1 percent.

“This is a healthy retail sales report and consistent with underlying economic momentum that has fueled a steady run of retail sales increases,” NRF chief economist Jack Kleinhenz said. “The big question is whether households can continue this spending pace, which is helping drive the current economic cycle. We think they can, but the big risk to the outlook is the trade war, which could raise prices while reducing consumer confidence and household buying power.”

Moody’s retail analyst Mickey Chadha characterized retail as having “pockets of strength” bolster by the strong economy. Chadha said one of those pockets is anything related to the home, a direct response to strong home values spurring consumers to spend on and spruce up their surroundings. Overall, the ratings services company anticipates consumer spending to continue to be healthy this year.

June retail sales were boosted by car sales, which were up 0.9%, and building and gardening materials, which were up 0.8%.

Clothing and related sales were down 2.5% compared to May but up 4 percent over June 2017. For the first six months of the year, the category increased 5.1% compared to the first half last year. Department stores, in particular, declined by 1.8% from last month. Performance for the tier was flat for the first half.

The only category to have performed worse during the month was sporting goods and hobby stores, which declined by 3.2% from the previous month. In that case, the sector continued on a downward slide that puts it 4.7% below the same time last year.

Year on year, total sales at the pump made the biggest leap, increasing 21.6% on rising gas prices. Non-store sales, which is predominately online driven, were up 10.2% over June 2017.

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