US retail sales flat in June as consumption cools
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Sales at gas stations dropped 3 per cent from May, while those at auto dealers dropped 2.3 per cent.
PHOTO: AFP
WASHINGTON – Retail sales in the US slipped less than analysts anticipated in June on a weaker performance in the auto and gas segments, government data showed on July 16.
The slower consumption growth adds to recent data that shows the world’s biggest economy is cooling gradually, although there is still some way to go.
A downward trend is likely to raise the central bank’s confidence that it can soon begin cutting interest rates.
To ease demand and bring inflation back down sustainably, the Federal Reserve has rapidly lifted the benchmark lending rate and, in recent months, held it at a decades-high level.
In June, overall retail sales were US$704.3 billion (S$947.5 billion), virtually unchanged from May’s figure, according to the Department of Commerce.
Analysts had expected a 0.3 per cent drop, and May’s increase was revised slightly higher as well.
From a year ago, the rise in June was 2.3 per cent, a cooldown from the prior month as well.
Analysts have long been expecting consumers to pull back as higher interest rates bite, lifting borrowing costs for consumers and businesses.
“We believe that consumption growth will, if anything, slow further in (the second half of 2024), as high interest rates continue to weigh on demand and the labour market takes a further turn for the worse,” Pantheon Macroeconomics said in a recent note.
Even as consumption appears to have slowed, “conditions are far from weakening to a point that would be considered recessionary”, said economist Rubeela Farooqi of High Frequency Economics in a note.
She expects the latest data – coupled with improved readings on inflation – will allow the Fed to ease monetary policy, likely in September.
Among sectors, sales at auto dealers dropped 2.3 per cent from May, while those at gas stations dropped 3 per cent.
But excluding auto and gas, total retail sales were up 0.8 per cent in June – indicating that there was still some way to go in easing demand. Sales at restaurants and bars were up 0.3 per cent from a month prior, the Commerce Department report showed.
The Fed is set to make its next rate decision at the end of July, and analysts widely expect the central bank to begin lowering rates in September. AFP
