U.S. retailers expect sales to rise

U.S. retail sales rose 0.2% in June, following a revised 0.5% increase in the prior month, reports CIBC.

Although “sales disappointed,” says Andrew Grantham of CIBC World Markets Economics, “upward revisions to the prior month and more encouraging detail of the June figures should limit any blow to markets this morning.”

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He adds, “Consumer spending was tracking just above a 2% annualized pace for Q2 prior to today’s release, and is likely to be running at a similar pace after these figures with the upward revisions offsetting any disappointment from June.”

And companies are restocking their store shelves, which is a sign they expect sales will remain solid in the months ahead, notes the Associated Press (AP). Steady inventory rebuilding can bolster economic growth by increasing demand for manufactured goods and boosting factory production. Still, sales need to remain healthy so that companies aren’t stuck with unwanted inventories.

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Businesses sharply cut back on restocking in the first three months of the year, a big reason the economy shrank at a 2.9% annual rate, adds the AP. That was the largest contraction since the first quarter of 2009, in the depths of the recession.

But since then companies have stepped up their inventory rebuilding. Greater restocking suggests that companies are confident consumer and business spending will grow, and they want to ensure that they have enough goods to meet the demand.

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Analysts forecast the economy will expand at a 3% annual rate.

Businesses have also stepped up hiring this year, says the AP, which means more Americans will have paychecks to spend, likely boosting growth. Employers have added an average of 230,000 jobs a month in 2014, up from 194,000 last year.