5 Top Stocks To Buy As Retail Sales Defy Expectations

On Jul 1, the Department of Commerce released retail sales figures for May, which exceeded expectations by a wide margin. The report comes on the back of strong payroll numbers for June and an increase in inflation. Together, this bunch of bullish data has successfully addressed lingering concerns about the state of U.S. economic expansion.

June marks the third consecutive gain for the retail sales metric, all of which have been rather substantial. This series of data indicates that consumer spending likely picked up in the second quarter after increasing at its most sluggish pace for the year in the January-March period. With American consumers remaining confident, it makes good sense to invest in select retail stocks.

Sales Surge Marks Third Consecutive Increase

In June, retail sales increased 0.4%, blowing past the consensus estimate of 0.2%. U.S. consumers purchased more motor vehicles and a slew of other goods, including building materials and furniture. Auto sales advanced 0.7%, identical to the increase experienced in May. Meanwhile, service station sales dropped 2.8%, reflecting falling gasoline prices.

Retail sales also increased by 3.4% from the same period last year. Additionally, core retail sales, which exclude autos, gasoline, food services, and building materials, increased 0.7%. This metric most closely corresponds to the consumer spending component of GDP. Core retail sales were revised upward for May to reflect a 0.6% increase rather than the previously reported 0.4%. 

 Nonstore Retailers, Restaurants Lead Gains

In June, online and mail-order sales led the gains, increasing 1.7%, which was in line with May’s increase. This was closely followed by sales at food services and drinking places, which increased by 0.9%. Miscellaneous store retailers also experienced a 0.6% uptick in sales.

Significant gains were also experienced in the health and personal care category, receipts for which increased 0.5%. Sales for building materials and clothing and accessories increased by an identical amount. Food and beverage stores, and furniture and home furnishing stores also witnessed a 0.5% increase in receipts.

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