NRF: Retail sales slowed in June

The National Retail Federation (NRF) reports that retail sales slowed in June with the likely cause being continued consumer worries about the impact of government policies on the economy.

Total retail sales, excluding automobiles and gasoline, were down 0.33% month over month but up 3.19% year over year in June, according to the Retail Monitor Report from Affinity Solutions in concert with the NRF. June sales were down from the 0.49% month-over-month and 4.44% year-over-year results reported in May.

Sales are not adjusted for inflation and are compiled from receipts at hundreds of retailers during the month. NRF also strips out restaurant sales for its core reading, which showed sales declined 0.33% from the prior month and increased 3.19% from June 2024.

“June’s numbers indicate that prolonged uncertainty surrounding the economy, tariffs and trade policy could be pushing consumers to adopt a ‘wait-and-see’ approach with their household budgets,” said Matthew Shay, NRF president and CEO. “This was the first monthly decline since February, and spending was down across almost all sectors. Economic fundamentals haven’t been disrupted yet, and shoppers still have the ability to spend on priorities, but the economy is gradually slowing, and there has been an impact on the psyche of consumers. While passage of the ‘Big Beautiful Bill’ is clearly supportive of economic growth, unresolved and restrictive trade policies remain a significant headwind.”

June sales rose in seven of nine categories tracked by the NRF on a yearly basis, but the growth rate was far less than reported in recent months, indicating consumers did pull back on overall spending in June. Consumers did continue to make online purchases ahead of proposed tariffs from the Trump administration. NRF said digital sales were up 24.11% from a year ago. Sporting goods, hobby, music and book sales rose 8.52% from a year ago. Health and personal care sales increased 3.47% from a year ago.

General merchandise stores like Walmart and Dollar Tree benefited from increased sales of 3.18% from a year ago, according to the report. Grocery store sales rose 2.59% from a year ago, which aligns with food inflation rates between 2.2% and 2.4% reported in June.

Apparel stores saw a 2.71% boost in sales in June, likely from higher consumer demand as prices have declined in recent months. Economists said consumers were enticed by promotional pricing from retailers at the high and low ends of the spending spectrum.

Given the pending tariffs on many electronics and appliances, consumers bought forward in June, lifting sales 2.43% from a year ago.

Consumers are not spending more on furniture or home furnishings, with sales down 1.14% from a year ago. Building and garden supply stores also saw sales decline 5.33% in June compared to a year ago. Building costs and garden supply costs have risen slightly from a year ago, and consumers have curtailed spending in these areas in recent months, the report notes.

Economists at Wells Fargo Securities noted Friday that elevated uncertainty is beginning to creep into economic activity.

“Recent revisions to GDP show real personal consumption expenditures expanding at a 0.5% annualized pace in the first quarter, a significant moderation from the 2.8% pace averaged in 2024,” noted the Wells Fargo report. “The weakening trend stretched into May, with real consumer spending falling 0.3% over the month, and has underpinned a softer pace of consumer credit growth recently. … The pullback in underlying demand has led us to revise our forecast for second quarter real GDP growth to 1.8% (annualized), down from 3.4% previously.”