Retail sales remained flat in June, defying Wall Street’s expectations of a decline amid signs of a slowing US economy. Economists had expected a 0.3% drop in spending, according to Bloomberg data. Meanwhile, retail sales in May were revised upwards to an increase of 0.3%, from the previous reading of 0.1%, according to statistics office data..
June sales, excluding cars and gas, rose 0.8%, above the agreed estimate for a 0.2% increase. The monitoring group in a statement on Tuesday, which excludes several categories and volatile factors in the quarter’s GDP reading, rose 0.9% in June, above estimates for a 0.2% increase..
Although retail sales were unchanged in June, a strong 0.9% rise [month-on-month] in watchgroup sales should ease concerns about consumer plight in the wake of a renewed decline in sentiment,” Capital Economics president of North America. Admittedly, second-quarter consumption and GDP growth still looked like it wasn’t better than 2% y/y, but strong gains in June set the stage for better performance in the third quarter.”
Out-of-store retailers led gains by category, rising 1.9%. The biggest decline came at petrol stations, where sales fell 3%. Car and parts dealers also saw a 2% decline..
The update on consumer spending comes amid a slowing U.S. economy but is still growing. The latest data, coupled with better-than-expected inflation readings, has led markets to widely expect the Fed’s first rate cut by the end of its September meeting..
During an interview at the Washington Economic Club on Monday, Federal Reserve Chairman Jerome Powell declined to specify when the Fed might begin its monetary easing cycle. “I’m not going to send signals about any particular meeting,” he said. “We will make these decisions meeting by meeting, evolving data and risk balance..”
The importance of essential retail sales in assessing economic growth
Core Retail Sales is an economic indicator that measures the total financial value of sales in the retail sector, excluding automotive sales and the fuel sector. It is calculated on a monthly basis and provides a picture of changes in consumers’ business spending .
Core retail sales are very important because they highlight the overall pattern of spending and consumption in the economy. Here are some key points about core retail sales:
Measuring economic growth: Core retail sales are an important indicator for measuring economic growth, accounting for a large part of GDP. If core retail sales show strong growth, it usually indicates an improvement in the economy and a higher level of economic activity. For their part, fiscal policies may take measures to boost government spending in retail-related sectors, such as increasing infrastructure spending or implementing financial support programs for SMEs in this sector.
Spending Guidelines: Basic retail sales provide information about spending trends for consumers. This information can be used to identify business sectors that are experiencing growth or decline in demand, depending on the type of products purchased or not purchased.
Impact on businesses: The retail sector is one of the most important economic sectors, so the performance of core retail sales affects the performance of companies in this sector. Strong growth in core retail sales is a positive signal for businesses related to retail and consumer sales, and may lead to increased revenue and profits.
Economic policies: Basic retail sales are used as one of the variables on which economic policymakers are based. When core retail sales are weak, economic officials may take measures to boost consumption and stimulate economic growth, such as lowering interest rates or implementing stimulus programs.
The impact of core retail sales on economic policy decisions
Core retail sales are an important indicator that influences economic policy decisions in various ways. Here are some of the effects that core retail sales can have on economic policy decisions:
Economic growth: Core retail sales are an indicator of the strength and growth of the economy. If core retail sales are growing strongly, it could indicate increased spending and demand by consumers, boosting overall economic growth. This strong economic growth may lead to policy decisions to support this growth, such as strengthening investment monetary policies or encouraging investment in retail-related sectors.
Employment and unemployment: The retail sector is one of the largest employers and job providers. If core retail sales are growing strongly, it could lead to increased demand for products and services, prompting companies to increase their production and hire more workers. This can contribute to reducing unemployment rates and improving economic stability. In this case, economic policies may take measures to support the retail sector and promote employment opportunities, such as offering tax incentives to companies or implementing training programs to qualify workers.
Consumption and spending: Domestic consumption and spending are among the most important factors supporting economic growth. If core retail sales are growing, it means that consumers are spending and consuming more. Economic policies may take measures to boost consumption and increase spending, such as lowering interest rates to encourage borrowing and boosting consumer loans, or offering fiscal incentives to consumers to increase spending.
Monetary and fiscal policies: Core retail sales may affect monetary and fiscal policy decisions as well. If core retail sales are weak and indicate a decline in consumption, monetary policymakers may take measures to stimulate the economy and support growth, such as lowering interest rates to encourage borrowing and stimulate investment and consumption. In general, core retail sales are used as a key economic indicator that influences economic policymakers in their decision-making. These data are carefully analyzed and studied to assess Economic situation and take appropriate measures to support growth and improve economic stability.
