Meanwhile, consumer sentiment is still gloomy.
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:
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.”
On Thursday, another key economic indicator for consumer goods showed inflation rising. The Producer Price Index, which is a measure of prices for goods at wholesale and other levels before they reach retail, rose 11.3% in year-over-year in June. That was the largest increase since the jump of 11.6% in March, which was the highest spike for this index ever recorded by the US Bureau of Labor Statistics. The increase was mostly pegged to a 10% jump in energy prices.
“Today’s surge in wholesale prices offers companies and consumers little reason to be confident,” said Katie Denis, VP of communications and research at the Consumer Brands Association, in a statement. “Energy prices underpin everything CPG companies do to make and deliver products to consumers, and their ripple effect is showing up in the price of commodities the industry heavily relies on.”
Even as consumers continue to spend, they remain downcast about the economy overall. With a 1.1% increase from the June measure, the initial July reading of consumer sentiment from the University of Michigan was “relatively unchanged, remaining near all-time lows,” wrote UM Survey of Consumers Director Joanne Hsu. More consumers are blaming inflation for eating away at their living standards, matching levels seen during the Great Recession. Additionally, the belief that one should make a purchase now to avoid higher prices later gained a stronger foothold.
Taken together, this week's data points to an economic picture where consumers are spending, but they're doing so with some hesitation about rising prices, and less certainty about what's ahead.
What: The National Retail Federation kicks off 2023 with a look at the latest in retail innovation. The three-day event features educational programming, an expo, startup zone and more. Featured speakers include Walmart US President John Furner, UPS CEO Carol B. Tomé and Neiman Marcus Group CEO Geoffroy van Raemdonck.
When: Jan. 14-17, 2023
Where: Jacob Javits Convention Center, New York