Shoppers were back in stores last month as retail sales posted a better-than-expected gain.
According to the U.S. Commerce Department, sales were up 7.5% in June to $524.3 billion — besting economists’ estimates of a 5% increase. That was on top of an 18.2% rise recorded the prior month. However, total sales from the April to June period were down 8.1% year over year, with record growth in e-commerce sales unable to make up for lost revenue due to mandated store closures.
In addition to recording better-than-expected retail sales numbers for June, the U.S. economy also saw more jobs added for the month than had been forecast. The Bureau of Labor Statistics reported that American employers gained 4.8 million jobs, while the unemployment rate dropped to 11.1%. (Economists had predicted an addition of 2.9 million nonfarm payrolls, along with a jobless rate of 12.4%.)
While retail sales began to tick back upward in May and June, new cases of the coronavirus have surged in states including Arizona, California, Florida and Texas. The uptick has led some governors to pull back on their reopening plans in an attempt to curb the spread.
Watch on FN
For instance, California reversed course on its reopening process this week, shuttering nonessential offices as well as indoor spaces including malls, restaurants and movie theaters, while Texas joined the list of states to enforce mask requirements. Meanwhile, states such as New York and Illinois have placed restrictions on visitors from certain states in an effort to prevent an uptick of their own.
As they grappled with coronavirus-induced store closures, retailers faced additional challenges this spring as fears about declining job prospects and increasing anxieties about personal finances led consumers to slash their discretionary spending. When stores first closed in mid-March, retailers were hit hard — and many took dramatic steps aimed at preserving cash flow. Companies implemented layoffs and/or furloughs, cut executive pay and tapped revolving credit lines.
However, for some already-struggling retailers, the coronavirus proved to be the final nail in the coffin. Since mid-May, several boldface American retail companies have filed for Chapter 11 bankruptcy protection, among them Neiman Marcus Group, JCPenney and J.Crew. What’s more, a number of retailers remain on bankruptcy watch, including women’s apparel boutique Francesca’s, Ann Taylor owner Ascena and Men’s Wearhouse parent Tailored Brands.