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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.

June Retail Sales up Modestly Beneath a Stronger Headline Number

Baseline retail sales showed nice growth in June, following more robust gains in April and May. Our “control” measure of retail sales was up 0.35% in June, following gains of 0.46% in May and 0.91% in April. The headline retail measure showed a gain of 0.57% in June, but that was partially offset by -0.26% of revisions to May data. (The control sales measure for May saw essentially no revision.)

Why were headline sales up more sharply? Two reasons: higher gas prices and a rebound in building materials store sales following earlier weakness. Thus, sales at service stations rose 1.1%, in line with the recent bounce in gas prices. Sales at building materials stores rose 3.9% in June, on the heels of a 4.5% decline over March–May. 

The control sales measure abstracts from these sectors partly because they are not as consumer-focused as other sectors and partly because of their extreme short-term volatility. The latter was certainly apparent for these sectors in recent months. For the other sector excluded from control sales, motor vehicle dealers, sales were up a scant 0.06%, which made only a slight dent in the 1.5% decline registered over the preceding 5 months.

It continues to be the case that the bulk of the recent improvement in sales growth has gone to online retailers (up another 1.1% in June). For traditional, brick-and-mortar retail sectors, department and apparel store sales continued flat. Restaurant sales growth has slowed recently, while grocery store sales have picked up. Furniture and electronics/appliance store sales continue sluggish, while sales at books/sporting goods have grown nicely.

Looking through all the clutter and chop, underlying retail sales growth has improved over the last three months, as is clear in the accompanying chart. The gains aren’t large enough to single-handedly drive robust GDP growth, but they have been enough to dampen recession fears. We perceive the news to be consistent with our forecast line of GDP growth in the 1.5% +/- range.

Retail Sales Trends
Retail Sales Trends
Source: Census Bureau. As of 30 Jun 16. “Control” retail sales is total sales less vehicle dealers, service stations and building materials stores.

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 45 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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