Publish date:

U.S. Retail Sales Surprise: June Total Leaps Despite Inflation Surge

U.S. consumers returned to the stores last month, with retail sales rising by a surprisingly strong 0.6% in the face of the fastest inflation in 13 years.

U.S. retail sales were unexpectedly stronger last month, data from the Commerce Department indicated Friday, suggesting job gains and rising vaccination rates offset inflation concerns in the world's biggest economy.

June retail sales rose 0.6% from last month to a collective $621.3 billion, the Commerce Department said, well ahead of the Street consensus forecast of a 0.4% decline. The May total, however, was revised to lower, to a decline of 1.7% on the month. Stripping out auto and gasoline sales, June retail sales were up 1.3%, the Commerce Department report noted.

"This report ought to dampen some of the recent talk of fading consumers, which we’ve found quite surprising, given that households are sitting on $2.5 trillion of extra savings accumulated during the pandemic, while wage and salary income is being boosted by the recovery in the labor market," said Ian Shepherdson of Pantheon Macroeconomics.

"Looking forward, the wild card remains the pace at which people choose to run down their accumulated savings. In the absence of any prior experience remotely like the current situation, this is impossible to forecast with confidence," he added. "But we continue to think its implausible to argue that people will choose to hold all the cash and rely solely on regular income to finance all their spending."

TheStreet Recommends

Consumer price increases looked to have little impact on consumer spending, even with June inflation rising at a much-faster-than-expected 5.4% from last year, according to data from the Bureau of Labor Statistics published last week, the fastest pace since 2008. 

Job gains have been robust, with weekly applications for new unemployment benefits falling to a post-pandemic low of 360,000 over the period ending July 11, the Bureau for Labor Statistics said Thursday.

June jobs gains were pegged at 850,00, in fact, well above Street forecasts with leisure and hospitality leading in new additions. 

U.S. equity futures were modestly higher following the data release, with contracts tied to the Dow Jones Industrial Average indicating a 75 point opening bell gain and those linked to the S&P 500 priced for a 10 point advance.

Nasdaq Composite futures, meanwhile, were indicating an opening bell gain of 50 points as benchmark Treasury bond yields held at 1.327%.