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The numbers: Sales at U.S. retailers rebounded in June in a good showing for the economy, as Americans flocked to bars and restaurants and bought more clothes and other consumer goods.
Sales at U.S. retailers increased 0.6% last month, the government said Friday. The Economists polled by The Wall Street Journal had forecast a 0.4% decline.
Households have increasingly shifted their spending toward services they shunned during the pandemic. Dining out, entertainment, travel, vacation trips and so forth.
Take bars and restaurants, the only category in the monthly retail report that involves services. Sales jumped 2.3% and rose sharply for the fourth month in a row.
Consumers also would have bought more new cars and trucks last month, but automakers can’t produce enough of them because of a shortage of computer chips. Semiconductors are now a critical component in modern vehicles.
Excluding autos, retail sales advanced 1.3%, almost three times as much as Wall Street expected.
Big picture: Most households have plenty of money to spend thanks to massive government stimulus, a rapidly recovering economy and a robust jobs market. There’s little likelihood spending will drop off soon so long as Covid cases remain low.
Strong household spending is expected to keep the economy humming through the end of the year. Consumer outlays account for about 70% of U.S. economic activity.
The one negative: Some of the increase in spending reflects higher inflation. The cost of living has jumped 5.4% in the past year — the fastest pace since 2011.
Read: The cost of living surges, CPI shows, as inflation spreads through economy
Americans are paying more for a variety of goods and services, but the Federal Reserve contends it’s just temporary. The reopening of the economy has led to a surge in pentup demand that businesses are unable to satisfy all at once.
Read: Inflation is surging. How high will it go? Check out MarketWatch’s new tracker.
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were set to open higher in Friday trades.
