US retail sales exceed forecasts in June
US retail sales grew more than expected last month as Americans loosened their purse strings in a sign that consumers remain on a solid footing and continued to support the world’s largest economy in the second quarter.
Headline retail sales climbed 0.4 per cent in June, matching the previous month’s rise, the Commerce Department said on Tuesday. The broad-based increase exceeded economists’ expectations for a 0.1 per cent rise.
So-called control sales, which strip out volatile items like petrol and building materials and offer a picture of underlying sales, rose 0.7 per cent eclipsing forecasts for a 0.3 per cent rise.
The upbeat figures come as markets have begun to price in a rate cut by the Federal Reserve as soon as this month amid weakness in the manufacturing sector and uncertainty about the US-China trade war. Fed chair Jay Powell appeared to cement those expectations earlier this month when he noted mounting risks to the US economic outlook in dovish testimony to Congress.
“These data won’t stop the Fed easing on the 31st, though for the record we remain firmly of the view that the economy does not need lower rates,” said Ian Shepherdson, economist at Pantheon Macroeconomics.
“The only weak point is manufacturing, which appears to be bottoming already and in any event accounts for only 12% of GDP and 8.4% of payrolls. But we do expect this report to give pause to FOMC members pushing for a 50bp cut, which just makes no sense to us.”