Second Straight Drop in U.S. Retail Sales Shows Tepid Spending
Retail sales unexpectedly dropped for a second month in June, signalling consumers are providing only modest support for the U.S. economy, Commerce Department data showed Friday.
Highlights of Retail Sales
- Purchases dropped 0.2% (forecast was 0.1% gain) after falling 0.1% the prior month (previously reported as 0.3% drop)
- Sales minus car dealers and gas stations fell 0.1% after no change a month earlier
- Retail control-group sales, which are used to calculate GDP and exclude the categories of food services, auto dealers, building materials outlets and gasoline stations, decreased 0.1% after no change
- Sales fell in six of 13 major retail categories in June
The figures suggest households remain cautious about spending and may provide less of a boost for the second-quarter economy after a weak start to the year. Receipts weakened at department store, sporting goods outlets and restaurants. Sales within the so-called retail control group have weakened for three straight months, and the decline in June indicates a weak finish to the first half of the year. While the release accounts for only a small part of consumer purchases, household spending on services probably has kept up a moderate pace as steady job gains bolster Americans’ pocketbooks. Faster wage gains, still elusive in this expansion, would provide a further boost to consumption. The Commerce data don’t reflect changes in prices, and consumers enjoyed lower gasoline costs in June, which households may have opted to save rather than spend elsewhere.
September most likely choice for ECB policy change; July a close call: Reuters poll
The European Central Bank is likely to wait until September before announcing a shift away from its ultra-easy policy, while a move this month is seen as too close to call, a Reuters poll of economists showed. Improving economic growth in Europe and hints from ECB policymakers have helped shape expectations for a shift, probably in the form of an announcement that it will taper its asset purchases, even though the inflation outlook doesn’t point to a need for a change. German bund yields and the euro have pushed higher in recent weeks, a trend expected to extend over the coming year, according to a clutch of separate Reuters polls of fund managers, fixed-income strategists and currency analysts over the past few weeks. Euro zone economic growth is expected to remain strong but steady through to the end of 2018, the latest Reuters poll of over 75 economists showed. But analysts trimmed inflation expectations for this year slightly compared with a month ago.
Rare meeting among Chinese regulators could set bigger role for central bank
China’s financial regulators are gathering in Beijing in a once-in-five-years huddle that many expect will formalize a greater coordination role for the central bank, but will stop short of pushing changes that could potentially destabilize the economy. The National Financial Work Conference is strictly closed-door, but its outcome will be widely watched. At the inaugural conference in 1997, Beijing set up China’s insurance regulator. The second in 2002 saw the creation of the banking regulator. China Investment Corp [CIC.UL], the sovereign wealth fund, was formed after the 2007 conference. The most recent meeting in 2012 yielded no significant policy change as the country’s top leadership went through a once-in-a-decade transition, with Xi Jinping taking Hu Jintao’s place as the leader of the People’s Republic of China. Ahead of the once-every-five years congress of the Communist Party in autumn this year, stability of the economy and society is key, with Xi expected to further consolidate his hold on power.