Retail Sales Rise; PPI Falls
The reports, which hold substantial interest for trucking, were made public Friday.
The Commerce Department said that retail sales in June rose 0.2% to a seasonally adjusted $292.9 billion due to a 1.5% increase in the sales of trucks and cars. Despite the rise, growth has slowed to the weakest pace in a decade, according to Bloomberg.
Almost all trucking operations depend on the health of retail sales because it involves nearly every type of cargo. Consumer spending accounts for two-thirds of all economic activity, and has helped hold off a recession.
Although a falling PPI shows weak demand for goods, which would mean fewer shipments for trucking companies, tame inflation could lead to further interest rate cuts by the Federal Reserve to spur economic activity.
Also Friday, the University of Michigan’s preliminary index of consumer sentiment in July rose to 93.7 compared with a final reading of 92.6 in June. The index measures consumers' attitudes about the economy and their current financial picture.
Commerce said that although retail sales rose, excluding vehicles it fell 0.2%, dragged down by a slump in gasoline purchases. Vehicle sales account for 75% of monthly retail sales, and totaled $72.88 billion in June.
According to Bloomberg, analysts had been expecting a 0.3% increase in retail sales and a 0.2% increase in sales excluding vehicles.
Meanwhile, Labor reported that the so-called "core" producer price index, which excludes volatile energy and food prices, rose 0.1% in May, the smallest increase in three months.
The Associated Press noted that the PPI fell due to record decreases in residential electricity and natural gas costs as reported by the government, as well as steep declines in gasoline prices.
Reuters reported that analysts thought this would lead to the Fed room to cut interest rate for the seventh time at its next meeting in August.
