Stronger Spending Signals Consumer Resilience Despite Inflation
US Retail Sales Surge in June
Retail sales in the US rebounded significantly in June, suggesting that the tariffs imposed by President Donald Trump have not yet had a major impact on consumer spending habits.
- Overall retail sales rose by 0.7%, far exceeding economists’ forecasts of a 0.6% increase.
- This rebound comes after a 0.9% decline in May, based on revised US Census Bureau data.
Philadelphia Fed Business Outlook
Meanwhile, the Philadelphia Federal Reserve’s Industrial Business Outlook survey showed a notable recovery in sector activity, with the index climbing to 15.9 points in July, compared to -4.0 in June, well above expectations of -1.2.
Core Sales — A Boost to GDP Growth
Core retail sales — which exclude volatile items and are key to calculating GDP growth — rose 0.5%, ahead of the expected 0.3%, and up from 0.2% in May.
Excluding Autos & Fuel
June sales excluding autos and fuel increased by 0.6%, doubling analyst forecasts of 0.3%. In May, this category showed no growth.
Sector Highlights:
- General merchandise stores: +1.8%
- Auto dealers and parts: +1.2%
Despite the robust sales data, investors still expect the Federal Reserve to proceed with potential interest rate cuts, even after this week’s data showed persistently high inflation.
Conclusion:
June’s retail sales rebound highlights strong consumer confidence, despite inflation and tariff concerns. While the Fed faces complex signals between resilient consumption and sticky inflation, traders should monitor upcoming monetary policy decisions closely.
