Retail and Food Services See Broad-Based Gains in June
U.S. retail and food services sales rose 0.6% in June to $720.1 billion, according to the Census Bureau’s latest advance estimate. That rebound follows a 0.9% decline in May, suggesting underlying consumer resilience. On a year-over-year basis, sales climbed 3.9%, while the April–June quarterly gain stood at 4.1%. Food services and drinking places led the way with a 6.6% annual increase, while nonstore retailers advanced 4.5%, underscoring continued strength in e-commerce. Retail trade overall was up 0.6% from May and 3.5% year-over-year.
Unemployment Claims Signal a Stable Labor Market
Initial jobless claims for the week ending July 12 fell by 7,000 to 221,000, showing improvement after the prior week’s upward revision to 228,000. The four-week moving average dropped to 229,500, its lowest since April. However, insured unemployment rose slightly by 2,000 to 1.956 million, and the unadjusted insured unemployment total reached 2.016 million—up 6.4% week-over-week. Notably, Michigan, Kentucky, and New York saw substantial increases in unadjusted claims due to layoffs in manufacturing and transportation sectors. The insured unemployment rate held steady at 1.3%, signaling a labor market that remains tight but shows signs of emerging strain.
Philadelphia Fed Manufacturing Survey Turns Positive
The Federal Reserve Bank of Philadelphia’s July Manufacturing Business Outlook Survey showed a rebound in regional factory activity. The general activity index climbed to 15.9—its highest since February—after three months of contraction. New orders rose to 18.4, and shipments surged to 23.7. Employment also rebounded, with the index hitting 10.3, and 17% of firms reporting hiring increases. Price pressures remain elevated: the prices paid index jumped to 58.8 and prices received climbed to 34.8, pointing to broad-based cost inflation. Forward-looking indicators remained positive, though the employment outlook dipped slightly.
Retail Strength Balancing Labor Soft Spots and Cost Pressures
The June rebound in retail sales provides a constructive signal for consumer-driven sectors, particularly discretionary and online retail. However, persistent inflationary pressures and a modest rise in continuing claims suggest caution in interpreting labor strength. The mixed signals from the Philadelphia Fed survey—improving orders and output but sticky price gains—complicate the outlook for interest rates and corporate margins.
Market Forecast: Cautiously Bullish Near Term
The combination of stronger retail spending, a still-resilient labor market, and improving regional manufacturing data supports a cautiously bullish near-term view for equities, particularly in consumer discretionary and industrials. However, traders should remain alert to inflation stickiness and possible softening in job retention trends, especially in manufacturing-heavy states. Barring surprises from upcoming inflation data or Fed commentary, near-term equity momentum remains constructive.
