US retail sales rose less than expected in June, data out Tuesday showed.
The figures, released a week ahead of the July FOMC meeting, could allay concerns that the world’s largest economy remains too hot for cool inflation, even as a key underlying aggregate printed a sizable beat.
Nominal spending rose 0.2% last month, less than half the 0.5% pace economists expected, and matching the lowest guess from nearly six-dozen forecasters.
May’s headline print was revised higher to show a 0.5% increase.
Although the ex-autos print, 0.2%, likewise missed, sales excluding autos and gas matched estimates, and more notably, the control group notched a 0.6% MoM gain, double the expected increase.
That latter figure (the control group) is what markets should focus on. Of course, investors eager for evidence to support the Goldilocks narrative would prefer to take the headline miss at face value, but the control group is a better measure of the underlying spending impulse.
The number of categories posting an increase fell to seven for June from nine the prior month and nine in June of 2022. Spending at food services and drinking places, the only services sector category in the report, barely rose.
The control group beat should bias Q2 GDP estimates higher but, again, market participants seeking confirmation for a “soft landing” narrative will be happy with the soft headline.
Overall, the report had no immediate implications for monetary policy and should come and go without incident.
