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US Retail Sales Were Disappointing in June

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US retail sales

US consumer spending accounts for close to two-thirds of the US economy. So, any indicator pointing to an uptick in spending is positive for US economic growth. Retail sales account for about one-third of all consumer spending. They fell by 0.30% in June. The market didn’t expect the fall. It was expecting 0.20%–0.30% month-over-month growth. Retail sales rose by 1% month-over-month in May. This number was downwardly revised from 1.20% to 1%. Retail sales totaled $442 billion in June.

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NRF cuts the retail sales forecast

The NRF (National Retail Federation) has cut the forecast for retail sales growth in 2015. The cut was due to the slowdown in retail sales in 1H15. Now, NRF expects US retail sales to grow by 3.50%—compared to its previous estimate of 4.10% in February 2015.

In June, the fall in the retail sales was negative for ETFs like the Consumer Discretionary Select Sector SPDR Fund (XLY) and the Consumer Staples Select Sector SPDR Fund (XLP).

Investment impact

Falling growth in US retail sales is negative for the economy. This could mean a slower rate of spending and inflation growth. Slowing inflation could delay the rate hike by the Fed. This would be positive for gold that doesn’t yield income. This would also be positive for gold prices (GLD) and gold stocks like Hecla Mining (HL), Harmony Gold (HMY), and Royal Gold (RGLD). Hecla Mining accounts for 1.40% of the VanEck Vectors Gold Miners ETF (GDX).

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