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Did Low Oil Prices and Auto Sales Affect June Retail Sales Data?

PART:
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Part 4
Did Low Oil Prices and Auto Sales Affect June Retail Sales Data? PART 4 OF 5

How Consumer Confidence and Retail Sales Trended in June

Vehicle sales fell in June

US vehicle sales (CARZ) fell in June to 16.4 million from 16.6 million sales in the previous month. Vehicle sales have been falling at a reduced pace since the recent peak sales of 18.3 million units in December 2016. The vehicle sales component of retail sales is expected to drop 0.5%-0.8%, reflecting the drop in the actual vehicle sales for June. Healthy vehicle sales growth is a positive sign for the US economy and the auto industry (ADRA). We have only witnessed a marginal decline, so there’s no reason to worry yet.

How Consumer Confidence and Retail Sales Trended in June

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Consumer confidence remains encouraging

Consumer confidence in June remained at higher levels. Retail sales (XRT) and consumer confidence are also correlated and provide means to understand the economic performance of any economy. Higher consumer confidence translates into higher consumer spending and better economic growth. The University of Michigan Consumer Confidence Index dipped to 95.1 from 97.1 in the previous month, and the Conference Board’s Consumer Confidence Index rose to 118.9 from 117.6 in May. Stronger consumer confidence and retail sales have been good for stock markets (SPY). This relationship could remain intact this month.

Vehicle sales to be a drag in June

Lower vehicle sales growth is likely to deflate retail sales data for June, but the overall sentiment in regards to the economy is likely to remain upbeat. In the next part of this series, we’ll analyze how retail sales data that will be released on July 14 could impact the equity (QQQ) and bond markets (BND).

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