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Retail sales rise at slower-than-expected pace in June

June retail sales missed Wall Street estimates but still showed growth while an upward revision to sales in the prior month indicated that the US economy remains resilient.

Retail sales rose 0.2% in June from the previous month, lower than Wall Street's estimates for 0.5% growth. Sales excluding auto and gas increased 0.3%, in line with estimates from economists surveyed by Bloomberg. Meanwhile, May's sales were revised up to 0.5% from 0.3%.

"While they continue to spend, the June retail sales report suggests that consumers are becoming more thoughtful with their purchases," Oxford economics lead US economist Oren Klachkin wrote in a note Thursday. "Altogether, the data indicate that consumer spending propelled the economy at a softer pace in Q2 relative to Q1."

Seven of the 13 categories highlighted in the release saw increases from a month ago. Furniture and home furniture stores increased 1.4% while electronics and appliance stores gained 1.1%. Growth at non-store retailers, which includes online sales, helped keep total sales higher than the month prior with a 1.9% increase from May.

Department stores saw sales decline by 2.4%. Meanwhile, gasoline stations declined by the most of any major category, falling 1.4% from the month prior. Sales at grocery stores fell 0.7%. The monthly retail sales report does not adjust statistics for inflation.

The report, released by the Commerce Department, offers a snapshot of consumer spending at a time when economic data has been coming in stronger than expected and spurring discussion about the Fed's interest rate hike campaign ending without a recession. The retail sales increase in June comes as consumer prices rose at their slowest pace in more than two years during the month.

"The details are fairly encouraging overall, but we still remain of the view that the consumer is slowing down," Jefferies US economist Thomas Simons wrote on Thursday. "Were it not for the Social Security-fueled jump in January, the first half of this year would look fairly subdued. Consumers are facing tougher choices when it comes to spending, now that they have their biggest incentive to rebuild and increase their savings in decades."

Consumers have remained resilient despite many economists expecting the end of the student loan moratorium and tightening credit conditions to weigh on spending in the second half of the year. During second quarter earnings conference calls over the last week, bank executives, who operate some of the nation's largest consumer checking and credit accounts, have cheered the resilience of the consumer.

Read more: How to find the best checking accounts for July 2023

"The consumer's in good shape," JPMorgan CEO Jamie Dimon said during the bank's earnings call on July 14. "They're spending down their excess cash."

A customer checks prices while shopping at a retail store in Vernon Hills, Ill., Monday, June 12, 2023. On Thursday, the Commerce Department releases U.S. retail sales data for May. (AP Photo/Nam Y. Huh)
A customer checks prices while shopping at a retail store in Vernon Hills, Ill., Monday, June 12, 2023. On Tuesday, the Commerce Department released U.S. retail sales data for June. (AP Photo/Nam Y. Huh) (ASSOCIATED PRESS)

Josh Schafer is a reporter for Yahoo Finance.

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