Massive Miss on U.S Retail Sales

Sales at U.S. retailers unexpectedly dropped in June, curbing optimism about the strength of the rebound in consumer spending during the second quarter.

Purchases decreased 0.3 percent after a 1 percent advance in May that was smaller than previously reported, Commerce Department figures showed Tuesday in Washington. The median forecast of 82 economists surveyed by Bloomberg called for a 0.3 percent gain. Eight of 13 major retail categories showed declines in demand.

An early Memorial Day holiday that may have boosted sales in May at the expense of last month, and a longer school year caused by the harsh winter probably contributed to the more subdued sales performance for the quarter. Stronger gains in incomes will probably be needed to give consumer spending, which accounts for almost 70 percent of the economy, a bigger lift heading into the second half of the year.

“The weakness is pretty broad-based, but it does look like categories that you would consider to be seasonal in nature looked to be very weak,” said Stephen Stanley, chief economist at Stamford, Connecticut-based Amherst Pierpont Securities LLC, who projected June retail sales would be unchanged from the prior month. “It puts a little cold water on the idea that the consumer was gathering momentum.”

Estimates in the Bloomberg survey ranged from a decline of 0.2 percent to a 0.8 percent gain. May’s reading was revised down from an initially reported 1.2 percent increase.


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell