United States retail sales rose modestly in June as lower petrol prices weighed on service station receipts, but stronger vehicle purchases and robust online shopping signalled resilient consumer demand and prompted economists to lift second-quarter economic growth forecasts.
Retail sales increased 0.2% in June, matching market expectations, after an upwardly revised 1.0% gain in May, according to the Commerce Department's Census Bureau.
It marked the smallest monthly increase in five months, with the data reflecting spending on goods and not adjusted for inflation.
Compared with a year earlier, retail sales climbed 6.7%, despite households continuing to grapple with higher prices stemming from import tariffs and, more recently, renewed conflict in the Middle East.
Consumer spending has remained supported by higher-income households benefiting from rising equity markets, while generous tax refunds, healthy savings and bargain hunting have also helped sustain demand.
A resilient labour market, characterised by steady wage growth amid limited hiring and layoffs, has further underpinned spending.
Separate data from the Labor Department showed initial jobless claims fell by 8,000 to a seasonally adjusted 208,000 in the week ended 11 July, the lowest level since May and below expectations for 217,000 claims.
Lower fuel prices were a significant drag on headline retail sales. Receipts at service stations fell 5.3% in June after rising 2.6% in May, reflecting weaker petrol prices during a brief easing in geopolitical tensions.
That relief proved temporary, however. Oil and petrol prices have since resumed climbing after the collapse of the U.S.-Iran ceasefire and renewed hostilities in the Middle East.
Excluding petrol, consumer spending was broadly stronger across several categories.
Receipts at motor vehicle dealerships rose 1.9%, while non-store retailers, including online merchants, also recorded a 1.9% increase, boosted by Amazon's four-day Prime Day sales event and competing promotions from rival retailers.
Sales at electronics and appliance stores rose 0.8%, while sporting goods, hobby, musical instrument and book retailers posted a 1.3% gain.
Restaurant and bar spending, the report's only services category, edged up 0.1% in June. However, May's figure was revised sharply higher to a 1.2% increase from a previously reported 0.1% decline, likely reflecting stronger spending during the FIFA World Cup.
Building material and garden equipment stores recorded a modest 0.1% increase in sales, while furniture store receipts were unchanged.
Health and personal care retailers saw sales fall 0.8%, while clothing stores and food and beverage retailers also recorded declines, suggesting a combination of discounting and softer consumer demand as households remain sensitive to higher prices.
Core retail sales, which exclude automobiles, petrol, building materials and food services and feed directly into gross domestic product calculations, rose 0.5% in June after an upwardly revised 0.8% increase in May, reinforcing expectations that consumer spending remained a solid driver of economic growth during the second quarter.
