Retail sales rose 0.3% in May despite pressure from higher inflation and interest rates
The Associated Press
June 15, 2023, 10:18 AM
NEW YORK (AP) — Americans increased their spending at retailers last month despite pressure from still-high inflation and rising borrowing costs. ... Thursday’s report from the Commerce Department showed that retail sales rose 0.3% from April to May, boosted by stronger sales of auto and parts dealers.
Economists had been expecting a decline in sales for the month. Last month’s increase pointed to a still-resilient economy, though retail sales have been bumpy this year after surging nearly 3% in January. Sales tumbled in February and March before recovering in April.
The latest retail sales data follow a government report this week that consumer inflation eased last month. Prices rose just 0.1% from April to May and are up just 4% over the previous 12 months — the lowest such figure in over two years. Americans are still facing surging prices for many items, including rent and used cars, though some of them are expected to slow or even decline in the coming months.
At the same time, closely watched “core” prices, which exclude volatile food and energy costs and are considered better able to capture underlying inflation trends, increased 5.3% in May compared with 12 months earlier. That’s still far above the Fed’s target of 2%.
US consumer confidence jumps to highest level since early 2022
Source: ABC News
WASHINGTON -- The American consumer's confidence jumped in June to its highest level in 18 months as a strong labor market continues to buoy the U.S. economy. The Conference Board reported Tuesday that its consumer confidence index rose to 109.7 in June from 102.5 in May. That's the highest the reading has been since January of 2022 and much higher than economists had forecast.
The business research group’s present situation index — which measures consumers’ assessment of current business and labor market conditions — rose to 155.3 from 148.9 in May. The board’s expectations index — a measure of consumers’ six-month outlook for income, business and labor conditions — climbed to 79.3 this month from 71.5 in May.
A reading under 80 often signals a recession in the coming year. The Conference Board noted that reading has come in below 80 every month but one since February of 2022. The board said that consumers' fears of a recession declined in June, with 69.3% of respondents saying a recession is somewhat or very likely in the next 12 months, down from 73.2% in May.
Consumer spending, which makes up about 70% of U.S. economic activity, has held up well despite the Federal Reserve raising interest rates in its effort to cool the economy and bring down persistent, four-decade high inflation. At its last meeting, the Fed elected not to increase its benchmark borrowing rate after raising it 10 straight times over 15 months.
One Percent Move Report for June 27, 2023 June 27, 2023
Introduction:
(Morgan Stanley) What Happened in the Markets?
• The S&P 500 Index rose 1.1% Tuesday to end the day at 4,378.41 having gained 14.0% thus far in 2023.
• 10 out of 11 S&P 500 sectors were higher on the day, as Consumer Discretionary (+2.1%), Information Technology (+2.0%), Materials (+1.4%), and Industrials (+1.3%) outperformed the S&P 500 Index. Communication Services (+1.1%), Real Estate (+1.1%), Financials (+0.6%), Consumer Staples (+0.3%), Energy (+0.2%), Utilities (+0.0%), and Health Care (-0.2%) underperformed.
• By the 4:00 p.m. equity market close, the US 10-year Treasury yield increased 4 bp to 3.76%; WTI crude oil prices decreased 2.3% to $67.78 per barrel; and gold decreased 0.5% to 1,913.48.
• US equities moved higher today, as economic data on housing, durable goods orders, and consumer confidence appeared more resilient than expected.
• May’s new home sales came in much stronger than expected, at 12.2% month-over-month, compared to the consensus estimated -1.2%, setting a 15-month high.
1st Quarter GDP revised up to 2.0%
Original estimate was 1.3%. 2.0% is solid growth. Last 3 quarters have been 3.2%, 2.6%, and 2.0%. Basically, the recession has been canceled. This is better growth than Trump had in his 3 years as President before Covid.
Private sector companies added 497,000 jobs in June, more than double expectations, ADP says
Source: CNBC
The U.S. labor market showed no signs of letting up in June, as companies created far more jobs than expected, payroll processing firm ADP reported Thursday. Private sector jobs surged by 497,000 for the month, well ahead of the downwardly revised 267,000 gain in May and much better than the 220,000 Dow Jones consensus estimate. The increase resulted in the biggest monthly gain since July 2022.
From a sector standpoint, leisure and hospitality led with 232,000 new hires, followed by construction with 97,000 and trade, transportation and utilities at 90,000. Annual pay rose at a 6.4% rate, representing a continued slowing that nonetheless still is indicative of brewing inflationary pressures.
“Consumer-facing service industries had a strong June, aligning to push job creation higher than expected,” said ADP chief economist Nela Richardson. “But wage growth continues to ebb in these same industries, and hiring likely is cresting after a late-cycle surge.” The unexpected jump in payrolls comes despite more than a year’s worth of Federal Reserve interest rate increases aimed in large part to cool a jobs market in which there are still nearly two open positions for every available worker.
ADP’s count comes a day ahead of the more closely watched nonfarm payrolls report from the Department of Labor. That is expected to show an increase of 240,000 after a 339,000 gain in May. While the two reports can differ broadly, the ADP numbers pose some upside risk for Friday’s report.
