17/07/2018 07:30 AST

US retail sales rose solidly in June as households boosted purchases of automobiles and a range of other goods, cementing expectations for robust economic growth in the second quarter.

Signs of a strengthening economy, together with a tightening labour market and firming inflation, likely will keep the Federal Reserve on track to continue raising interest rates this year.

Fed Chairman Jerome Powell offered an upbeat assessment of the economy last Friday, telling lawmakers that “over the first half of this year, overall economic activity appears to have expanded at a solid pace.” The US central bank raised interest rates in June for the second time this year and has forecast two more rate hikes by the end of 2018.

“This puts the economy in a very, very good position as it starts its tenth year of forward movement in July,” said Chris Rupkey, chief economist at MUFG in New York. “This strengthening economy gives the Federal Reserve the green light to raise rates a third time this year at their September meeting.” The Commerce Department said on Monday that retail sales increased 0.5 per cent last month. Data for May was revised higher to show sales rising 1.3 per cent instead of the previously reported 0.8 per cent gain.

May’s gain in retail sales was the largest since September 2017. Economists polled by Reuters had forecast retail sales rising 0.5 per cent in June. Retail sales in June increased 6.6 per cent from a year ago.

Excluding automobiles, gasoline, building materials and food services, retail sales were unchanged last month after an upwardly revised 0.8 per cent increase in May. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. Core retail sales were previously reported to have risen 0.5 per cent in May.

Given the upward revision to May’s data, the unchanged reading in core retail sales last month likely does not change views that consumer spending accelerated in the second quarter. Consumer spending, which accounts for more than two-thirds of US economic activity, braked sharply in the January-March period, growing at its slowest pace in nearly five years.

The dollar pared losses against a basket of currencies after the data, while stocks on Wall Street were flat. US Treasuries were lower, with the yield on the interest rate-sensitive two-year note rising to its highest level since August 2008. In addition to the solid retail sales data, a sharp narrowing of the trade deficit in April and May has also bolstered expectations of a strong GDP reading for the second quarter. Second-quarter growth expectations were also boosted by another report from the Commerce Department on Monday showing business inventories increased 0.4 per cent in May.


The Gulf Today

Ticker Price Volume
QNBK 183.41 314,625
APPC 47.90 363,668
SAICO 10.80 239,189
KAYAN 15.50 7,407,695
SABIC 124.80 2,756,706
WALAA 20.90 156,306
BATIC 35.00 115,637
Index Closing Change
NIKKEI 225 22,841.12 291.88 (1.29%)
DAX 11,715.03 -61.52 (-0.52%)
S&P 500 2,809.21 -0.71 (-0.02%)
US, EU equities mostly drop as outlook darkens

18/10/2018

US stocks followed European stocks down on Wednesday on stubborn worries over global trade and high oil prices, with London the lone major riser after the EU offered to extend Britain’s Brexit transi

The Gulf Today

China’s new loans rebound to $199.25b in September

18/10/2018

China’s new bank loans rebounded in September after dipping in the two previous months, as policymakers rolled out measures to ensure sufficient liquidity in the financial system amid worries a trade

The Gulf Today

Canada tariff exemptions offer auto industry relief

17/10/2018

Canada has excluded a long list of steel and some aluminium products from its 25 per cent tariff on US metal, offering short-term relief to the country’s auto sector, which relies heavily on US-made

The Gulf Today

Stock markets surge as rate tensions ease

17/10/2018

Global stock markets rose on Tuesday as tensions in bond markets eased and the US earnings season got off to a promising start, analysts said.

European equity markets benefited from an app

The Gulf Today

Annual US budget deficit hits $779b, highest since 2012: US Treasury

16/10/2018

The US budget deficit hit $779 billion (Dh2.8 billion) in the fiscal year ending September 30, the highest since 2012 and $113 billion more than in the prior year, the Treasury announced Monday.

Gulf News