Despite a slower growth in employment, retail sales continued their upward trajectory in June, indicating a robust consumer sector. The economy might be showing signs of cooling, but consumers, buoyed by a still-growing labor market and a substantial savings buffer, continue to drive the economy’s direction.
One of the key drivers of this spending is the back-to-school season, a significant shopping event.
Although the spending pace has decelerated, consumers’ financial health remains strong, enabling them to support spending for the majority of the year. This financial strength is partly due to the excess savings accumulated during the pandemic and the easing inflation.
Data from the U.S. Census Bureau revealed that overall retail sales in June increased by 0.2% from May and 1.5% year over year. In comparison, May saw a 0.5% month-over-month increase and a 2% year-over-year increase.
A breakdown of the June sales data shows an increase in six out of nine retail categories on a yearly basis. Online sales, health and personal care stores, and electronics and appliances stores led the growth. On a monthly basis, four categories, including furniture and home furnishings stores, showed an increase. Despite slower job growth, the willingness of consumers to spend, backed by their strong balance sheets, continues to bolster the retail sector.