US retail sales rise moderately; economy plodding along
By Lucia Mutikani
WASHINGTON (Reuters) — U.S. retail sales rose less than expected in June as receipts at service stations and building material stores declined, but consumers boosted or maintained spending elsewhere, which likely kept the economy on a solid growth path in the second quarter.
Overall, the mixed report from the Commerce Department on Tuesday painted a picture of consumer resilience, though slowing momentum in spending growth. It did not change expectations that the Federal Reserve would resume raising interest rates this month after keeping them unchanged in June.
«The forces meant to hold back real spending power after 16 months of Fed tightening — drawdowns in pandemic savings, high inflation, higher borrowing costs — fell short of meaningfully slowing consumption,» said Will Compernolle, macro strategist at FHN Financial in New York.
«The resilient consumer shows the Fed has very little reason to think its tightening has gone too far at this point.»
Retail sales increased 0.2% last month. Data for May was revised higher to show sales gaining 0.5% instead of 0.3% as previously reported. Economists polled by Reuters had forecast retail sales gaining 0.5%. Retail sales are mostly goods and are not adjusted for inflation. They rose 1.5% year-on-year in June.
Spending has remained strong despite 500 basis points worth of interest rate hikes from the Fed since March 2022, when the U.S. central bank kicked off its fastest monetary policy tightening cycle in more than 40 years.
A tight labor market continues to boost wage gains while some households still have savings accumulated during the COVID-19 pandemic. Consumers' purchasing power is also gradually rising as inflation subsides.
Sales at auto
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