US DATA
June's advance retail sales report was much stronger than expected, including positive revisions to prior data, suggesting continued strength in consumption at the end of Q2.
- Overall retail sales saw flat (-0.02% unrounded) growth M/M, slower than the +0.3% registered in May (upward rev from 0.1%) , but above the -0.3% expected. Sales ex-autos (+0.4% vs 0.1% expected) and ex-auto/gas (+0.8% vs +0.2% expected) impressed, and also with higher revisions.
- Closely-watched Control Group sales rose 0.9%, far exceeding the 0.2% expected and up from 0.4% in May. The 0.86% unrounded was a shade slower than March's 0.87%, but basically the joint-highest rate of growth in 14 months.
- That was enough to bring the 3M/3M annualized rate of Control Group growth from 2.6% in May to 3.3% in June, the highest since January 2024, and well up from the 1.3% low in March which had marked the weakest pace of momentum since late 2021.
- As the headline figure suggests, gasoline and auto sales were a big drag, falling 3.0% and 2.0% respectively (and for reasons including price deflation and in the case of auto dealers, a major cyberattack), but outside of those and sporting goods (-0.1%), there were no declines in any other categories.
- This includes impressive growth in non-store retail sales (+1.9%) and building materials (+1.4%), with other large categories including health/personal care and food services/drinking places posting solid growth.
- With prices in deflation in June, this marks a very strong report in real terms that - combined with upward revisions - points to an upward consideration of GDP growth estimates in Q2 (Atlanta Fed's GDPNow latest estimate = 2.0%).
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