7/15/2015
By Dominique Paul, Research Analyst

Retail figures are out for the month of June. The Census Bureau reported indicated that while sales are up year-to-date, it is very clear that growth is decelerating on a monthly basis (see chart below). During June, retail sales fell 0.3% month-over-month to approximately $442.0 billion after gaining a downwardly revised 1.0% (from 1.2%) in May. When consumers are spending, it appears they favor food services and drinking places. Sales for that industry rose 7.7% year-over-year. Gas stations, on the other hand, saw sales decline 17.1% from last year. This may be a bigger reflection on the price of retail gasoline decreasing than the actual amount of gasoline consumed. Retail sales excluding auto sales were not that great of an improvement; it declined 0.1% which was far lower than the street’s call for a 0.6% gain.

The Census Bureau’s second report, Business Inventories, painted a slightly different picture for sales. During the month of May, total sales were $1.323 trillion, up 0.4% month over month. Manufacturers’ and trade inventories rose 0.3% month-over-month to $1.797 trillion. Merchant wholesalers saw the largest gain in inventories, +0.84 month-over-month to $581.8 billion. The sales-to-inventories ratio held steady at 1.36. Mounting inventories are a negative sign for the economy as supply may soon outpace demand. In the event that that occurs, we would see more layoffs among goods-producing firms.

Dominique Paul
Wall Street Strategies

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