Department Stores, Electronics Lead 0.6 Pct Rebound In June Retail Sales

U.S. consumers spent more in department stores and less on furniture and cars in June, the Commerce Department reported Friday (July 16), as the barometer that accounts for three-quarters of economic activity rose 0.6 percent from a surprisingly weak May report.

Officially, the government’s initial estimate of increased spending for June came in at $623 billion, which was better than the average economist forecast that had been expecting another decline of 0.4 percent. At the same time, the May results were revised lower, to -1.7 percent, from the initial report of a 1.3 percent month-on-month decline released in June.

The closely watched data reflect several ongoing shifts in the underlying economy, including the rising price of gasoline — which was up 2.5 percent — and a decrease in auto sales, which fell 2 percent in June versus the prior month.

Taken together, the core “ex-autos and gasoline” figure was 1.3 percent higher than May, with  the core retail trade figure inched up just 0.3 percent.

On an annualized basis, retail sales were up 18 percent from June 2020.

The Leaders And Laggards

Among the gainers, department stores led all other categories with a 5.9 percent increase for the month, followed by 3.4 gain in Miscellaneous Retail, a 3.3 percent increase in Electronics and Appliances, and a 2.6 percent bump in Clothing and Accessories.

On the downside, Furniture and Home Furnishing Retailers saw the biggest month on month decline in June, falling 3.6 percent, followed by a 1.7 percent slide in Sporting Goods, Hobbies, Music and Books, and a 1.6 percent decline in Building Materials and Garden Equipment.

The latest numbers also include the robust, and much cloned, Prime Day sales event, which was pulled forward this year into June, rather than being held during its traditional placement in July.  As has increasingly been the case, the Amazon-led discounting frenzy was matched, and in many cases, expanded upon by rival retailers such as Target and Best Buy.

The net result of this mushrooming, weeklong surge in sales events is that, by whatever name you affix to it, this pre-summer markdown extravaganza has become a huge deal that now rivals other retail stalwarts such as back-to-school and Black Friday.

Although consumers reportedly shunned big-ticket items in favor of smaller purchases, overall spending was pegged at $11 billion in U.S. eCommerce sales — marking a 6.1 percent increase over last year’s Prime Day and competing sales, according to Adobe Analytics.

While the official revenue split is not known yet, larger retailers with $1 billion in annual revenue saw a 29 percent increase in sales, compared to a 21 percent increase in sales by smaller merchants.

The June data also mark the last time this year that there will be no direct stimulus from the government being injected into the system. Albeit at a smaller rate than previous efforts, the child tax credit payouts that began July 15 will bring at least $250 per child under the age of 17 via direct deposit to over 80 percent of American households.

It’s the latest move that is aimed at helping families cover expenses while the economy gains traction and, like previous rounds of stimulus, is expected to benefit all types of retailers.