Flemming J. Nielsen
Danske Bank A/S
Retail sales in June increased 0.2% m/m (consensus 0.6% m/m) after increasing 0.5% m/m in May (revised up from 0.3% m/m). Retail sales excluding autos and gasoline increased 0.4% m/m in June (consensus 0.5% m/m) after increasing 0.3% m/m in May (revised up from 0.0% m/m). The retail sales control group, which besides autos and gasoline also excludes building materials, improved 0.6% m/m (consensus 0.5% m/m) after increasing 0.2% m/m in May (revised up from 0.0% m/m).
Looking at the detail, sales of building materials declined 1.0% m/m and auto sales declined 0.2% m/m. For both autos and building materials, the decline in June came on the back of solid gains in the previous months. This suggests that normalisation after a substantial boost from weather-related pent-up demand weighed on retail sales a bit in June.
Overall retail sales rebounded substantially in Q2. Headline retail sales in Q2 expanded 9.6% q/q annualised after increasing only 0.9% q/q annualised in Q1. Retail sales excluding autos, gasoline and building materials increased 7.2% q/q annualised in Q2, on the back of a modest 0.1% q/q annualised increase in Q1.
The outlook for retail sales and private consumption in coming months remains solid, with retail sales expected to be supported by strong employment gains above 250,000 monthly, lower gasoline prices in the wake of the recent decline in crude oil prices and continued wealth gains from both higher stock and house prices. Private consumption is expected to increase more than 3% q/q annualised in H2 14.
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