MNI DATA ANALYSIS: US June Retail Sales Up 0.5%, Ex-MV +0.4%>

--June Retail Sales Ex. Auto, Gas, Bldg Mat, Food Service Flat

By Kevin Kastner and Harrison Clarke

     WASHINGTON (MNI) - The value of retail sales rose by 0.5% in June 

overall and 0.4% excluding motor vehicle sales, with the headline number 

slightly below expectations, but following a sharp upward revision to 

sales in May, data released by the Commerce Department Monday showed. 

     Analysts have recently had a strong tendency to overestimate sales, 

so today's data maintain that trend. The miss was even lower when 

compared to the 0.8% gain markets had expected. 

--MOTOR VEHICLES SOLID

     Leading the gain in headline retail sales was a rise in motor 

vehicles, which posted a 0.9% increase after a 0.8% gain in the previous 

month. Analysts had correctly expected vehicle sales add to the headline 

number. 

     Gasoline station sales rose by 1.0% in June after a 3.0% May 

gain, as foreshadowed by recent increases in the AAA data. 

     Food services and drinking places' sales were higher in June, 

registering a 1.5% increase after rising by 2.6% in May. Building 

materials sales rose by 0.8% following a 2.5% increase in May. 

     Retail sales excluding autos, gasoline, and building materials  

rose by 0.2% in June. Further, excluding food services as well as the 

other three measures, retail sales were flat, a breather after recent 

strong gains. 

     Other sales categories were mixed, with sales gains at furniture 

stores, health and personal care stores, and at nonstore retailers 

offsetting a sharp decline in clothing store sales, as well as declines 

at electronics, department stores, and sporting goods/hobby stores. 

--2Q CONSUMPTION UP SHARPLY

     Incorporating an upward revision to April sales, an upward 

revision to May sales, and today's data for June, second quarter retail 

sales are up 7.9% at an annual rate from the first quarter average. 

     Sales excluding motor vehicles were up 7.7% at an annual rate from 

the previous quarter, while sales excluding autos, building materials, 

and gas were up 7.5%. Even when food services were also excluded, second 

quarter sales were still up 6.5% at an annual rate from the first 

quarter, pointing to underlying strength outside the volatile 

categories. The result should be a very good showing for second quarter 

PCE when it is released on July 27. 

     ** MNI Washington Bureau: 202-371-2121 ** 

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