Recent economic reports have been mixed. Retail sales rose +0.4% m/m in June, beating expectations of a +0.1% increase. Gains were widespread across most major industries, although gasoline sales dropped -2.8% m/m on falling prices. After stripping out volatile items, core sales, which are a direct input into the GDP calculation, rose a substantial +0.7% m/m. On a y/y basis, total sales are growing at a decent +3.4%, but that’s well below last June’s +6.0%. By contrast, core sales are running at a solid +4.6% y/y, stronger than the recent trend. The manufacturing sector, however, continues to struggle and barely remains in positive territory. Manufacturing industrial production did rise +0.4% m/m in June, but readings have been very weak through the last six months, and as a result the y/y rate fell from +0.7% to a mere +0.4%. Over the past year, manufacturing production has been weakest in apparel at -9.7% y/y and strongest in computers and electronics at +5.3% y/y.
