WASHINGTON—U.S. retail sales rose modestly in June as lower gasoline prices weighed on receipts at service stations, while continued strength in motor vehicle purchases and online shopping indicated consumer spending remained resilient despite broader economic pressures.
Advance retail and food services sales increased 0.2% from May to a seasonally adjusted $768.6 billion, following an upwardly revised 1.0% gain the previous month, according to data released by the U.S. Commerce Department's Census Bureau on July 16. Sales were 6.7% higher than a year earlier.
The June increase matched economists' expectations, although it marked the slowest monthly gain in five months. Lower fuel prices reduced the value of sales at gasoline stations, masking stronger demand in several other retail categories. Receipts at motor vehicle and parts dealers and nonstore retailers increased during the month, supported by consumer purchases and promotional events.
A closely watched measure of retail sales used in calculating gross domestic product, which excludes automobiles, gasoline, building materials and food services, rose 0.5% in June after a stronger gain in May. Economists said the increase suggested household spending strengthened in the second quarter despite persistent concerns about inflation and borrowing costs.
Separate Labor Department data released the same day showed initial claims for unemployment benefits fell to a two-month low, pointing to continued stability in the labor market and providing support for consumer spending.
Economists cautioned, however, that several headwinds remain. They noted that the boost from larger tax refunds earlier in the year is fading, while savings accumulated by many lower-income households have diminished. Some also warned that renewed increases in energy prices linked to tensions in the Middle East could place additional pressure on household budgets in coming months.
The retail sales report is among the indicators closely monitored by Federal Reserve policymakers as they assess the strength of consumer demand and its implications for inflation. While the latest figures pointed to continued economic resilience, analysts said the moderate pace of headline sales growth suggested spending is becoming more selective as households navigate higher prices and elevated interest rates.
