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By the Numbers

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

The economic analysis we previously featured in By the Numbers is now available on the Western Asset Blog. This page will no longer be updated.

Retail Revisions Boost Already Strong May Sales Gains

Headline retail sales rose by 0.5% in June. The "control" measure we track, sales excluding cars, gas stations, and building materials, rose 0.2%. The bigger story was revisions to the May gains, with both headline and control sales revised upward by 0.5%, to 1.3% and 1.1% gains, respectively.

The most notable gains in the May data occurred at restaurants (+2.6%), apparel stores (+2.9%), and building material stores (+2.5%). In June, apparel store sales fell back (-2.5%), but restaurants and building material stores saw further gains, up 1.5% and 0.8%, respectively.

Net of these swings, building material stores have not exhibited a break in trend this year, but restaurants and apparel stores do suggest stronger trend growth than what we had seen in recent years up through first quarter 2018. Most other store types show generally the same sales growth trends as were in place over recent years. Meanwhile, we should point out that only the books/sporting goods/music complex shows declining sales, and this might merely reflect lost sales to online vendors.

For retail as a whole, the chart is indicative. Total control sales rose above trend in May, but have offset some of that upturn in June. Has the consumer really turned the corner to a faster spending growth pace, or will the May gains turn out to be a one-month blip, just as did very strong sales gains in November 2017?

Our bet is on the latter outcome. The narrow focus of the May gains is perhaps a nod in favor of our take, but the May gains are, admittedly, sufficiently large to give one pause. Also, the issue is whether consumption trends are stable or accelerating. There is no indication anywhere of weakening trends.

Retail Sales Trends
Retail Sales Trends
Source: Census Bureau, as of 30 Jun 18. “Control” retail sales is total sales less vehicle dealers, service stations and building material stores.

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 43 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.

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