United States retail sales climbed more than expected in June, signalling a modest uptick in economic activity and giving the Federal Reserve further reason to delay any interest rate cuts as it assesses the inflationary impact of recent tariffs.
Data from the Commerce Department’s Census Bureau showed that retail sales rose 0.6% last month following an unrevised 0.9% decline in May.
The increase beat market forecasts for a 0.1% gain and represented a 3.9% rise from the same period a year earlier.
The rebound came after two consecutive monthly declines, and while some of the increase was likely due to price effects from tariffs rather than underlying demand, it still suggested consumer resilience.
Auto dealership receipts rose 1.2% in June after slumping 3.8% in May, although underlying data from car manufacturers pointed to a drop in units sold, implying higher prices drove the gains.
Sales at building material and garden supply stores increased 0.9%, while clothing retailers and online merchants posted gains of 0.9% and 0.4% respectively.
Spending at restaurants and bars - viewed as a key indicator of household financial health - rose 0.6%.
Meanwhile, receipts fell modestly at electronics and appliance stores, down 0.1%, and furniture outlets, indicating that higher prices in some tariff-affected goods categories may be curbing demand.
Meanwhile, separate figures from the Labor Department on Thursday showed initial claims for state unemployment benefits dropped by 7,000 to a seasonally adjusted 221,000 in the week ended 12 July - the lowest reading since April.
The decline exceeded forecasts of 235,000 and points to steady job growth heading into July.
The jobless claims data also covers the reference period for the upcoming July nonfarm payrolls report. Claims declined between the June and July survey weeks, suggesting that July’s employment numbers could remain solid.
The U.S. economy added 147,000 jobs in June.
The Federal Reserve is expected to hold interest rates steady at its upcoming policy meeting later this month, maintaining its target range of 4.25% to 4.50% - a level unchanged since December, while the CME FedWatch Tool indicates a 51.7% chance of a 25-basis point reduction in September.
