Consumers Are Buying

Jul. 17, 2018 3:37 AM ETXLY, XRT, VCR, RTH, RETL, FDIS, FXD, EMTY, RCD, PMR, CNDF, ISHP, JHMC1 Like

If there is one takeaway from Monday's advanced retail sales report it is the consumer continues to buy. On a year-over-year basis, total retail sales increased 6.6% as of the end of June. For the month, the actual increase was .5% and met consensus expectations. A large positive in the report was the .5% revision higher in May's .8% increase to a 1.3% increase. In Econoday's release covering the report they note,

What's striking is that autos were very strong in both June and May, up 0.9% and 0.8% respectively, with restaurants really showing unusual acceleration, up 1.5% and 2.6% in the two months. Gains here point to new confidence among consumers and are consistent with the strength underway in the labor market."

As can be seen in the above chart, non-store retail sales, mainly e-commerce sales, continue to increase at a year-over-year 10% growth rate. This faster growth relative to the total results in non-store sales capturing a larger percentage of the overall retail sales number. For June non-store retail sales is now 11.2% of overall sales and does not appear to be showing signs of slowing.

This article was written by

HORAN Capital Advisors is an SEC registered investment advisor that manages investment portfolios for individuals and institutions. Our firm utilizes a disciplined investing approach that should create wealth for our clients over time. Our investment bias is to invest in companies that generate a steady return over time, i.e., singles and doubles. This singles and doubles approach tends to lead to investments in higher quality dividend growth/cash flow growth companies. On the other hand, there are times when a company's stock price seems to be trading below its fair valuation. Short term gains are possible in these situations. I have been managing investment portfolios for individuals and institutions for over fifteen years and believe investing is like running a marathon and not a sprint. Taking the road less traveled, more often than not, leads to higher returns. Visit: The Blog of HORAN Capital Advisors at (https://horanassoc.com/insights/market-commentary-blog)
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