- US Retail Sales Boost Economic Outlook
Consumer spending surged in June as households increased spending on automobiles and a range of other items, supporting economists’ projection for broad growth in the second quarter.
Retail sales increased 0.5 per cent in June, lower than the upwardly revised 1.3 per cent recorded in May, the Commerce Department reported on Monday. May’s gain was the biggest since September 2017.
On a yearly basis, retail sales increased by 6.6 per cent.
Core retail sales, excluding automobiles and food items, were unchanged in June after the revised 0.8 per cent gain filed in May.
While the strong data indicates strengthening economy, it also supports federal reserve economic stance. Therefore, together with the strong job market and rising inflation, the Federal Reserve is likely to keep raising interest rates as widely projected.
“This puts the economy in a very, very good position as it starts its tenth year of forward movement in July,” said Chris Rupkey, chief economist at MUFG in New York. “This strengthening economy gives the Federal Reserve the green light to raise rates a third time this year at their September meeting.”
In addition to the strong retail numbers, trade deficit improved slightly in April and May, further supporting the expectations of a strong GDP reading in the second quarter. Another sign that growth is broad-based.
Consumer spending continued to support growth despite the ongoing trade war.
The US dollar gained slightly against emerging currencies, rising to 0.7418 against the Australian dollar.