WASHINGTON (Reuters) - U.S. retail sales rose solidly in June as households boosted purchases of automobiles and a range of other goods, cementing expectations for robust economic growth in the second quarter.
Signs of a strengthening economy, together with a tightening labor market and firming inflation, likely will keep the Federal Reserve on track to continue raising interest rates this year.
Fed Chairman Jerome Powell offered an upbeat assessment of the economy last Friday, telling lawmakers that “over the first half of this year, overall economic activity appears to have expanded at a solid pace.” The U.S. central bank raised interest rates in June for the second time this year and has forecast two more rate hikes by the end of 2018.
“This puts the economy in a very, very good position as it starts its tenth year of forward movement in July,” said Chris Rupkey, chief economist at MUFG in New York. “This strengthening economy gives the Federal Reserve the green light to raise rates a third time this year at their September meeting.”
The Commerce Department said on Monday that retail sales increased 0.5 percent last month. Data for May was revised higher to show sales rising 1.3 percent instead of the previously reported 0.8 percent gain.
May’s gain in retail sales was the largest since September 2017. Economists polled by Reuters had forecast retail sales rising 0.5 percent in June. Retail sales in June increased 6.6 percent from a year ago.
Excluding automobiles, gasoline, building materials and food services,
