June Retail Sales See Moderate Growth Amid Solid Economy

Retail sales in June demonstrated moderate growth, reflecting the stability of the current economy and near-zero inflation for retail goods, according to the latest CNBC/NRF Retail Monitor, powered by Affinity Solutions. This report, by the National Retail Federation (NRF), provides a detailed overview of retail sales trends and consumer spending behaviors.

Economic Overview

Despite facing high interest rates and lingering inflation in services, consumers are maintaining thoughtful spending habits. “Consumers are being thoughtful about their spending, prioritizing non-discretionary purchases,” said NRF President and CEO Matthew Shay. “Inflation has dropped to nearly zero for goods but remains persistent with services, and solid economic fundamentals are helping consumers make ends meet.”

Jonathan Silver, CEO of Affinity Solutions, told Street Fight, “Though overall retail spending (excluding auto and gas) increased 3.42% year-over-year in June, the strongest year-over-year growth since November 2023, there was only a slight increase in month-over-month retail spending, at 0.47%. This stabilization after May’s higher month-over-month growth (1.35%) was likely driven by Memorial Day sales, so a slightly lower monthly increase in June is not surprising.”

Key Retail Sales Data

Month-Over-Month and Year-Over-Year Growth

Total retail sales, excluding automobiles and gasoline, experienced a modest increase of 0.47% on a seasonally adjusted basis from May to June. Year-over-year, unadjusted total retail sales rose by 3.42% in June, marking the largest annual gain since last fall. This compares to increases of 1.35% month-over-month and 3.03% year-over-year in May.

Core retail sales, which exclude restaurants, automobiles, and gasoline, saw a 0.3% month-over-month increase in June and a 3.07% year-over-year rise. In comparison, May’s core retail sales grew by 1.2% month-over-month and 2.88% year-over-year.

Yearly Growth Trends

For the first half of the year, total sales were up by 2.39% year-over-year, while core sales increased by 2.62%. Notably, the year-over-year gain for total sales in June was the largest since November’s 4.24%, and the year-over-year gain for core sales was the highest since January’s 3.24%.

Sales by Category

June sales showed growth in five out of nine retail categories on a yearly basis, with the strongest performances seen in online sales, general merchandise stores, and clothing and accessory stores. On a monthly basis, sales increased in four categories. Detailed specifics from key sectors include:

• Online and Non-Store Sales: Up 1.78% month-over-month seasonally adjusted and up 23.08% year-over-year unadjusted. Jonathan Silver stated, “Online sales continue to be the gift that keeps on giving for retailers, and Amazon was a big winner. In June, Amazon had one of the biggest annual increases at 4.8% and a solid 1.2% month-over-month increase. Overall, the non-store retail category saw 23.08% year-over-year growth and 1.78% month-over-month.”
• General Merchandise Stores: Up 0.61% month-over-month seasonally adjusted and up 5.79% year-over-year unadjusted.
• Clothing and Accessories Stores: Down 0.11% month-over-month seasonally adjusted but up 5.35% year-over-year unadjusted.
• Health and Personal Care Stores: Down 0.04% month-over-month seasonally adjusted but up 4.63% year-over-year unadjusted.
• Grocery and Beverage Stores: Up 1.01% month-over-month seasonally adjusted and up 4.31% year-over-year unadjusted.
• Sporting Goods, Hobby, Music, and Book Stores: Up 0.68% month-over-month seasonally adjusted but down 0.52% year-over-year unadjusted.
• Electronics and Appliance Stores: Down 1.02% month-over-month seasonally adjusted and down 3.24% year-over-year unadjusted. Silver commented, “It’s key for retailers to adapt their strategies to align with consumer spending patterns. As an example, we’re observing a significant amount of flat to decreased spending across certain categories, as consumers prioritize essentials over discretionary items.”
• Furniture and Home Furnishings Stores: Down 0.62% month-over-month seasonally adjusted and down 3.26% year-over-year unadjusted.
• Building and Garden Supply Stores: Down 1.8% month-over-month seasonally adjusted and down 3.46% year-over-year unadjusted.

Market Insights

Overall, e-commerce retailers are becoming increasingly strategic, driving growth by boosting sales during typically slow spending periods. “With Walmart, Target, and Kohl’s introducing their own deal days to compete with Amazon’s Prime Day, we expect another strong showing in July for this category, as retailers look to tap into the holiday-like shopping spirit early,” said Silver.

Economic Indicators

The US inflation rate eased in June, reflecting the strength of the post-pandemic economic recovery. Silver highlighted, “This stronger-than-expected result means that the Fed is likely to cut interest rates in September. We’re not out of the woods yet, given that unemployment was up slightly in June, and the current state of the Presidential election is a bit unsettled. As such, retailers should stay the course on their current pricing strategies, since any changes could negatively impact consumer behavior.”