US retail sales rise 1% in June, bolstered by ecommerce

An increase in ecommerce sales was among the drivers of an uptick in US retail sales in June.

According to the US Department of Commerce, the total retail sales of $680.6 billion for June was a 1% increase over May. Year-over-year, the total represented an increase of 8.4%. The retail sales numbers came in just slightly above an analyst expectation of a 0.9% increase, CNBC reported.

The retail sales numbers come with the caveat that this data is not adjusted for inflation. Still, their bounce back up from a slight May decline offers evidence that consumers are continuing to spend in the face of rising prices.

Further buoying this sentiment, the Commerce Department also revised upward its data for May. It initially reported a decrease of 0.3%. Now, the Department is reporting a decrease of 0.1% for the month.

Online sales are partially to thank for the June increase. The nonstore sales category, which includes ecommerce, posted the highest month-over-month increase of any category other than gas stations, which are notoriously volatile and have seen massive increases with the rising price of gas. Nonstore sales were up 2.2% month-over-month, and rose 9.6% year-over-year. The growth points toward shoppers continuing to turn to ecommerce, even as in-store foot traffic has picked back up this year. It could reflect that shoppers are turning to ecommerce at a time when gas is expensive, and prices are rising across the economy.

This news arrives on a week when FTI Consulting projected that US ecommerce sales will reach $1 trillion for the first time in 2022, and Amazon Prime Day delivered the top two ecommerce spending days of the year.

Other notable changes came in the following consumer goods categories:

• General merchandise stores, including florists, pet stores and office supply stores: 1.4% month-over-month increase, 15.1% year-over-year increase.
• Furniture stores: 1.4% month-over-month increase, and 4.6% year-over-year.
• Clothing stores decreased 0.4% month-over-month, and fell 0.2% for the year.
• Health and personal care stores declined 0.1% month-over-month, and fell 0.6% year-over-year.
• Electronics stores were up 0.4% month-over-month, while falling 9.1% year-over-year.

As with other consumer metrics, this data is being monitored closely as prices rise at a record clip. Earlier this week, a report from the Consumer Price Index showed that the inflation rate spiked to a new 40-year-high of 9.1%.

The Commerce Department’s monthly report on retail sales is a key measure of demand at a time when the Federal Reserve is taking steps to cool off the economy. The Fed raised interest rates 0.75% in June, and is expected to take action at another meeting later in July. The retail report will be an important factor in determining the size of the interest rate hike, especially given that the Fed appeared to adjust the size of June's hike in the late stages of its decisionmaking process.

“June’s numbers show consumers are powering through price pressures, but inflation is eating away at savings built up during the pandemic and is wiping out recent income gains,” NRF Chief Economist Jack Kleinhenz said, in a statement. “Inflation remains a challenge to consumers trying to make ends meet and will continue to be an issue even if it cools down in the months ahead. Despite that, consumers are holding up notably well and continuing to spend.”