U.S. retail sales beat analysts' estimates Thursday, but the much-needed good news was overshadowed by the grim prospect of second wave of the coronavirus pandemic and spiraling unemployment.
The Commerce Department said on Thursday retail sales rose 7.5% last month. Economists were expecting expect retail sales in June to rise 5.4% compared with a 17.7% increase in May.
"Retail sales may have had a strong showing for June, but that's old news given how quickly the coronavirus resurgence is beating up the economy," said Robert Frick, corporate economist at Navy Federal Credit Union. "The fresher and more alarming news comes from the weekly unemployment claims, which were also released on Thursday and remain stuck at around 1.3 million. And those receiving government support due to unemployment, either from states or the federal government, known as continuing claims, increased."
Frick noted that the unemployment news will likely put more pressure on Congress to continue additional support to the millions of Americans who have lost their jobs due to the coronavirus. The extra support that's in place now is slated to end at the end of this month.
Total sales for April through June were down 8.1% from the same period a year ago.
Retail trade sales were up 6.4% from May 2020, and 5% above last year. Non-store retailers were up 23.5% from June 2019, while building material and garden equipment and supplies dealers were up 17.3% from last year.
The economy has been slowly climbing back from the impact of the coronavirus economic shutdown, when many retailers either shut down their businesses or have been operating at reduced capacity.
The infection rate has been climbing in several states that have attempted to reopen their economies, forcing some governments to halt their re-openings.
Separately, the Labor Department said Thursday that 1.3 million people filed for state unemployment benefits during the week ending July 11, slightly down from 1.31 million in the prior period. Economists polled by FactSet had been expecting 1.25 million claims up to last Saturday.
Through the week ending June 27, 48 states reported 14.283 million individuals claiming Pandemic Unemployment Assistance benefits and 44 states reported 936,431 individuals claiming Pandemic Emergency Unemployment Compensation benefits.