By the Numbers

Featuring brief segments of economic analysis from our senior economist Michael Bazdarich, PhD.

Sign up to receive an email as pertinent data are released.

June Retail Sales Disappoint…Yet Again

Retail sales were reported as declining in June, alongside slight downward revisions to April and May. Thus, retail data have reverted to the same old soggy trends in place for most of the last six months (and six years), with those trends interrupted only by a more upbeat release a month ago.

The accompanying chart shows our measure of control retail sales (which differs from others’ in that we include restaurant sales). This measure declined 0.1% in June, and the May gain was revised down to 0.6%. Control sales rose at a 2.4% annualized rate over the first half of 2015, with headline (total) sales up at a 2.0% rate. Both rates of increase are below the trend growth rate of recent years. In the chart, you can see control sales in June essentially back on the 2012–2014 trend path, following a slight, temporary move above trend in late-2014.

Our attention has been more focused on ongoing softness in capital spending and exports, which we believe have been the main drivers behind the 2015 stall in US manufacturing activity, thus also the main driver of slower GDP growth in the first half of 2015. However, the retail sales data are right in line with this story. There has been nothing within consumer spending to offset the slower growth in capital spending and exports, so that overall growth has moved lower, from a 2.0%–2.5% trend over 2010–14 to something like 1.0%–1.5% growth so far this year.

Hopes were raised last month when the June data releases came in generally stronger than preceding months. However, jobs, exports, and now retail sales have all come in soft in July, reverting to the trends in place prior to last month’s news and making the June news look like a blip.

Retail Sales Trends
Retail Sales Trends
Source: Census Bureau. As of 30 Jun 15. “Control” retail sales is total sales less vehicle dealers, service stations and building material stores

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 40 years of experience to his position. "By the Numbers" will address economic data releases that are pertinent to a broad range of investors.

Prior to joining the Firm in 2005, Mike ran his own consulting firm, MB Economics. He earned his PhD in Economics at the University of Chicago.

Sign up to receive an email as pertinent data are released.

© Western Asset Management Company 2017. This publication is the property of Western Asset Management Company and is intended for the sole use of its clients, consultants, and other intended recipients. It should not be forwarded to any other person. Contents herein should be treated as confidential and proprietary information. This material may not be reproduced or used in any form or medium without express written permission.
Past results are not indicative of future investment results. Investments are not guaranteed and you may lose money. This publication is for informational purposes only and reflects the current opinions of Western Asset Management. Information contained herein is believed to be accurate, but cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice. Employees and/or clients of Western Asset Management may have a position in the securities mentioned. This publication has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation or needs. It is your responsibility to be aware of and observe the applicable laws and regulations of your country of residence. Potential investors in emerging markets should be aware that investment in these markets can involve a higher degree of risk. Any forecast, projection or target is there to provide you with an indication only and is not guaranteed in any way.
Western Asset Management Company Distribuidora de Títulos e Valores Mobiliários Limitada is authorised and regulated by Comissão de Valores Mobiliários and Banco Central do Brasil. Western Asset Management Company Pty Ltd ABN 41 117 767 923 is the holder of the Australian Financial Services Licence 303160. Western Asset Management Company Pte. Ltd. Co. Reg. No. 200007692R is a holder of a Capital Markets Services Licence for fund management and regulated by the Monetary Authority of Singapore. Western Asset Management Company Ltd is a registered financial instruments dealer whose business is investment advisory or agency business, investment management, and Type II Financial Instruments Dealing business with the registration number KLFB (FID) No. 427, and members of JIAA (membership number 011-01319) and JITA. Western Asset Management Company Limited (“WAMCL”) is authorised and regulated by the Financial Conduct Authority (“FCA”). In the UK this communication is a financial promotion solely intended for professional clients as defined in the FCA Handbook and has been approved by WAMCL.