U.S. retail sales grew 3.42% in June

Retail sales reported by the National Retail Federation Retail Monitor indicated consumer spending slowed in June compared to May. Excluding automobile and gasoline, sales were up 0.47% from May, slower than the 1.35% growth reported in May.

However, retail sales grew 3.42% from June 2023, which was the highest gain for total sales since last November. Retail sales were only slightly higher than the 3% inflation rate for the same period.

When excluding restaurant sales, the NRF report posted Friday (July 12) shows that core retail sales were up 0.3% from May and 3.07% higher year over year. NRF said this was the highest annual increase since January’s 3.24% increase.

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

Total retail sales were up 2.39% for the first six months of this year and core sales rose 2.62% through June, at below or at the low end of the trade group’s annual sales projections between 2.5% and 3.5% growth over 2023.

“The slowdown in the U.S. economy has been led by a downshift in consumer spending. Consumers are still spending, but the mood music is changing. Credit card bills are mounting, excess savings are all but gone and while inflation has come down, prices have not. Households have started to prioritize non-discretionary purchases, typically a precursor for slower overall consumption growth,” said Sarah House, senior U.S. economist at Wells Fargo Securities.

One area where consumers do continue to spend is online. E-commerce sales rose 1.78% from May and jumped 23.08% year over year. Online spending outpaced every other category by a margin of 4 or more times.

Consumers also spent on general merchandise in June with sales 0.61% from May, and rising 5.79% from a year ago. Walmart executives recently said spending on general merchandise items, particularly seasonal purchases, has been steady.

Year over year apparel sales were up 5.35%. Consumers also continue to spend on health and personal care, with sales down slightly from May, but up 4.63% year over year. Grocery and beverage sales ticked up 1.01% from May and increased 4.31% year over year. Food and beverages continued to have somewhat inflated prices between 1-3% in June as reported by the Labor Department this week.

Spending was lower in several categories like in sporting goods, books and music where sales were down 0.52% year over year, despite a fractional increase from May. Electronics and appliance sales slid 1.02% from May and were down 3.42% year over year. Furniture and home furnishings sales were down 0.62% month over month with a 3.26% decrease from June 2023. Falling lumber prices sent building and garden supply sales down 1.8% from May, falling 3.46% from a year ago.

Somewhat softer consumer spending in brick-and-mortar is impacting some retailers like Ohio-based Big Lots. The deep discounter recently announced plans to shutter between 35 and 40 stores this year. The retailer has around 1,300 stores with 12 in Arkansas.

While the retailer has not yet released a list of the stores slated for closures, the store in Rogers remains closed after a roof leak from the recent tornado. The retailer removed all merchandise from the store while it’s being repaired. The Rogers location was not a typical Big Lots but was instead a pilot store. The 9,000-square-foot space opened in mid-2022 and focused on furniture, home furnishings and outdoor patio items. The store did not carry consumables, health and beauty items like traditional stores. Big Lots said the Rogers store is temporarily closed and there is no re-opening date set.