#RetailSales #InflationConcerns #FederalReserve
Surprisingly Sluggish Retail Sales in May Amidst Persistent Inflation Concerns
Retail sales in May rose a modest 0.1%, falling short of the anticipated 0.2% increase as indicated by the Dow Jones estimate. This figure, adjusted for seasonality but not inflation, represented a slight improvement compared to the downwardly revised 0.2% decline in April. Year-over-year, retail sales registered a 2.3% increase, though the sales figure was less impressive when excluding automobiles, which experienced a 0.1% decline against the projected 0.2% rise.
Gas station receipts took a hit due to moderating gas prices, reporting a 2.2% monthly decline. Conversely, sales at sports goods, music, and book stores surged by 2.8%. Online retailers saw a 0.8% uptick, while bars and restaurants reported a 0.4% decrease, and furniture and home furnishing stores experienced a 1.1% drop.
Despite the mixed retail sales data, stock market futures remained relatively unchanged, while Treasury yields declined following the report. Investor sentiment is on edge regarding the economy's trajectory and the implications for the Federal Reserve's monetary policy. Consumer spending, which accounts for approximately two-thirds of overall economic activity, could indicate a potential slowdown in growth, prompting the Fed to consider rate cuts.
Recent inflation numbers have shown some improvement, but consumer spending is displaying signs of weakness, as consumers have faced price pressures for over two years. The Fed's preferred inflation measure, which was 2.7% in April or 2.8% when excluding food and energy, falls short of the Fed's 2% target.
Market expectations suggest two interest rate reductions of a quarter percentage point each in 2019. However, following the retail sales report, traders in the fed funds futures market increased their bets that the Fed would ease monetary policy, with about a 23% chance of three cuts this year, according to the CME Group's FedWatch gauge.
Philadelphia Fed President Patrick Harker stated on Monday that a rate cut might be warranted later in the year if the data supports it, and he anticipates only one reduction.
Original Article: https://www.cnbc.com/2024/06/18/retail-sales-report-may-2024-may-retail-sales-rise-0point1percent.html
Leave a Reply