Went Shopping: July 15 – 19

Retail sales improved in June. Here are the five things we learned from U.S. economic data released during the week ending July 19.

1. Beyond automobiles and gasoline, June was a decent month for retail. Retail and food services sales held steady during the month at a seasonally adjusted $704.3 billion. Holding down the Census Bureau measure were sharp declines at auto dealers/parts stores (-2.0 percent, due to industry IT issues) and gas stations (-3.0 percent, due to lower prices). Net of both, core retail sales jumped 0.8 percent in June to an annualized $521.7 billion. Rising were sales at retailers focused on building materials (+1.4 percent), health/personal care (+0.9 percent), furniture (+0.6 percent), apparel (+0.6 percent), along with department stores (+0.3 percent) and restaurants and bars (+0.3 percent). Sales edged down 0.1 percent at sporting goods/hobby retailers and held steady in grocery stores. Retail and food services sales have totaled $4.139 trillion over the first six months of this year, 2.8 percent ahead of the 2023 comparable months. Over the past six months, core sales were 3.6 percent above their 2023 comparable. 

Manufacturing output modestly grew in June. The Federal Reserve estimates manufacturing production increased a seasonally adjusted 0.4 percent, following May’s 1.0 percent advance. Durable goods production was unchanged for the month (even as motor vehicle production rose 1.6 percent), while nondurables increased 0.8 percent (printing: +2.6 percent). Overall industrial production grew 0.6 percent following May’s 0.9 percent gain. Mining output edged up 0.3 percent, while utilities saw a 2.8 percent surge. Manufacturing output was 1.1 percent above year-ago levels, while overall industrial production was 1.6 percent over the same 12 months.

Forward-looking economic measures remained feeble in June. The Conference Board’s Leading Economic Index (LEI) dropped 0.2 percent to a seasonally adjusted 101.1 (2016=100). The LEI has declined 1.9 percent over the past six months. Six of ten LEI components positively contributed to the index, led by stock prices and building permits. The Coincident Economic Index (CEI) grew 0.3 percent to 112.6. The index was 0.6 percent above its reading six months ago. All four CEI components made positive contributions. The Lagging Economic Index (LAG) inched up 0.1 percent to 119.5, up 1.2 percent over the past six months. The Conference Board expects the U.S. economy will grow at a tepid 1.0 percent (annualized) during the third quarter.

Housing starts and building permits increased in June. The Census Bureau reports that housing starts grew 3.0 percent to a seasonally adjusted annualized rate (SAAR) of 1.353 million units. Even with the gain, starts were 4.4 percent under their year-ago pace. Multifamily home starts surged 22.0 percent but fell 2.2 percent among single-family homes. Looking towards the future, issued building permits jumped 3.4 percent to an annualized 1.446 million (-3.1 percent versus June 2023). Single-family home permits dropped 2.3 percent. Completions rose 10.1 percent to an annualized 1.710 million homes. Completions were 15.5 percent ahead of their year-ago pace.

Business Inventories grew, and sales remained steady in May. Manufacturing and trade inventories grew a half percentage point to a seasonally adjusted $2.546 trillion, leaving the Census Bureau measure up 1.6 percent from a year earlier. Both retailers’ and wholesalers’ inventories swelled 0.6 percent, while manufacturers’ inventories expanded 0.2 percent. Business sales held steady for the month at $1.861 trillion, up 2.0 percent from a year earlier. Wholesalers (+0.2 percent) and retailers (+0.4 percent) saw their sales increase, while retailers reported a 0.3 percent decline. The resulting inventory-to-sales (I/S) ratio of 1.37 mirrored April’s and was down a basis point from a year earlier.

Other U.S. economic data released over the past week:

• Jobless Claims (Week ending July 13, 2024, First-Time Claims, seasonally adjusted): 243,000, +20,000 vs. the previous week, +12,000 vs. the same week a year earlier). 4-week moving average: 234,750 (-1.1% vs. the same week a year earlier).
• Import Prices (June 2024, All Imports, not seasonally adjusted): Unchanged vs. May 2024; +1.6% vs. June 2023. Nonfuel Imports: +0.2% vs. May 2024; +1.0% vs. June 2023.
• Export Prices (June 2024, All Exports, not seasonally adjusted): -0.5% vs. May 2024; +0.7% vs. June 2023. Nonagricultural Exports: -0.6% vs. May 2024; +1.4% vs. June 2023.
• State Employment (June 2024, Nonfarm Employment, seasonally adjusted): Increased in 8 states, declined in 1 state, and held steady in 41 states and the District of Columbia vs. May 2024. Increased in 27 states and held steady in 23 states and the District of Columbia vs. June 2023.
• Housing Market Index (July 2024, Index (>50 = More Homebuilders View Housing Market as “Good” than “Bad,” seasonally adjusted): 42 (June 2024: 43; July 2023: 55).
• Treasury International Capital Flows (June 2024, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): -$16.7 billion (May 2024: +$128.1 billion; June 2023: +$55.3 billion).

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