June retail sales numbers show signs of economic stagnation
July 16, 2012
The on again-off again nature of the economic recovery seems to have regressed—or at least be stuck in neutral—based on today’s June retail sales data from the United States Department of Commerce and the National Retail Federation (NRF).
Data from both Commerce and NRF showed that retail sales decreased on a sequential basis in June for the third consecutive month. This marks the first time retail sales have fallen for three straight months since late 2008.
Commerce reported that June retail sales at $401.5 billion were down 0.5 percent compared to May and up 3.8 percent annually. And that total sales for the April through June period were up 4.7 percent annually. And when excluding autos, retail and food services sales in June were $330.9 billion, up 5.9 percent from June 2011 on an unadjusted basis and down 3.7 percent compared to May.
The NRF reported that June retail sales, which exclude autos, gas stations, and restaurants, were down 0.4 percent on a seasonally-adjusted basis from May and up 1.7 percent on an unadjusted basis annually, marking the 24th consecutive month of retail sales growth, it said.
“Weak economic numbers over the past few weeks have increased anxiety about the future direction of the economy,” NRF Chief Economist Jack Kleinhenz said in a statement. “Today’s data is discouraging but not demoralizing. If you look at the first half of the year overall, retail sales actually increased 4.6 percent year-over-year, indicating that the economy is improving but maybe not quick enough to impact consumer spending and job growth.”
NRF officials pointed out that still-high unemployment and slow job growth, and myriad global economic issues have decidedly taken a toll on U.S. consumers.
What’s more, it also appears that consumer confidence is waning, too, based on the results of the Thomson Reuters/University of Michigan consumer sentiment index released last Friday, which showed a drop to 72 in June from May’s 73.5, marking the lowest level in 2012.
As LM has reported, retail sales largely show slow and incremental growth, while continued growth is needed over a longer period, as consumer spending accounts for roughly 70 percent of U.S. economic activity. And while retail growth is relatively slow still, signals remain intact that the economy is showing some signs of recovery, with consumer confidence on the upswing to a large degree declines in gasoline prices over the last two months.
A fairy significant tailwind for retail sales is how they are not being aided by an added boost from inventory re-building, which was the case in the first half of 2010 and to an extent in 2011.
The continuing trend of slight or flat sequential retail sales increases remains largely intact due to fairly even retail spending at a time when retailers remain cautious on the inventory planning side and postponing commitments until the until the economic outlook becomes clearer, while they are risking stock outages by having very lean inventories.
“Consumers continue to exhibit sporadic and anemic spending,” said Charles W. “Chuck” Clowdis, Jr., Managing Director-Transportation Advisory Services, at IHS Global Insight. “A robust recovery is still elusive. Inventory re-stocking should be watched carefully by transport [and logistics services] providers.”
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