US retail sales posted a surprise increase, but initial jobless claims handily topped estimates for a second week, in what counted as a mixed read on the world’s largest economy a day after the Fed telegraphed its intent to raise rates further after taking June off.
The headline retail sales print, a 0.3% advance, came in near the top of the range. Guesses from nearly six-dozen economists ran the gamut from a 1% decline to a 0.5% increase.
It was the second consecutive monthly advance. Consensus expected a 0.2% decline.
The ex-autos and gas print, a 0.4% gain, was double the expected rise.
It’s tempting (and probably accurate) to call this yet another piece of incremental evidence to support the contention that the US consumer isn’t “tapped out” just yet. 10 of 13 categories posted a gain versus nine in April (and just five last May). Spending at food services and drinking places, the only services sector category in the report, rose 0.4%.
Importantly, the control group rose 0.2%, an as-expected read on the measure that “matters.” Last month’s blistering 0.7% advance was revised slightly lower.
Meanwhile, and perhaps more immediately relevant, jobless claims were unchanged in the week to June 10, at 262,000. Consensus expected a decline to 245,000.
Recall that the prior week’s increase was the largest since summer of 2021, pushing headline initial claims to the highest since October of that year.
Perhaps the latest uptick in claims is the “real deal” after all. Macro watchers have seen innumerable false starts on this front. Doomsayers have declared the onset of a sustained increase in the weekly figures again and again, only to see claims reverse lower. Continuing claims were likewise ahead of estimates, at 1.775 million.
Taken together, the two reports suggested a still resilient US consumer and some labor market softening, which is neutral for monetary policy I suppose.
The figures were released concurrent with the Empire and Philly Fed surveys. The Empire headline improved and beat estimates. Prices paid dropped, as did prices received. The new orders gauge rose sharply. The Philly headline was basically in line at -13.7. The price gauges were both benign.
Another”Meh”
Real rates at the moment are not restrictive enough to get us to the FOMC’s 2% target. But if the Fed holds here and inflation continues to recede, they’ll become more restrictive with each passing week. Couple that with ongoing QT and it may be enough to do the trick.