--- title: "Monday Update: Retail Sales Beat Expectations" description: In his Monday Update, Commonwealth’s Sam Millette highlights news on retail sales, home builder confidence, home sales, and personal income and spending. image: https://blog.commonwealth.com/hubfs/Brad_Images_IMO_Blog/2017/MarketOutlook_1.jpg --- [![The Independent Market Observer](https://blog.commonwealth.com/hubfs/IMO-Title-1.png "The Independent Market Observer")](https://blog.commonwealth.com/independent-market-observer) [![Commonwealth Financial Network](https://blog.commonwealth.com/hubfs/lockup_citron-1.png "Commonwealth Financial Network")](https://www.commonwealth.com/) - [Home](https://blog.commonwealth.com/independent-market-observer) - [About](https://learn.commonwealth.com/about/) ### ![print this page](https://blog.commonwealth.com/hs-fs/file-1376458285-gif/images/print.gif)Print # [Monday Update: Retail Sales Beat Expectations](https://blog.commonwealth.com/independent-market-observer/monday-update-retail-sales-beat-expectations) Posted by [Sam Millette](https://blog.commonwealth.com/independent-market-observer/author/sam-millette) This entry was posted on Jun 22, 2020, 12:36:19 PM and tagged [In the News](https://blog.commonwealth.com/independent-market-observer/topic/in-the-news) [Leave a comment](https://blog.commonwealth.com/independent-market-observer/monday-update-retail-sales-beat-expectations#comments-listing) ![In his Monday Update, Commonwealth’s Sam Millette highlights news on retail sales, home builder confidence, home sales, and personal income and spending.](https://blog.commonwealth.com/hs-fs/hubfs/Brad_Images_IMO_Blog/2017/MarketOutlook_1.jpg?width=300&name=MarketOutlook_1.jpg)Last week saw a number of important data releases come in above expectations, notably May’s retail sales report and June’s home builder confidence report. This will be another busy week for economic updates, with highlights on home sales, May’s durable goods orders report, and the personal income and spending reports for May. ##### Last week’s news On Tuesday, May’s **retail sales** report was released. Sales blew away expectations, increasing by 17.7 percent during the month against forecasts for an 8.4 percent increase. This rebound in sales as reopening efforts took hold is the largest monthly increase on record and shows that consumers were more than ready to get out and spend. Car sales were a highlight during the month, increasing by more than 40 percent from April; however, even core retail sales, which strip out the impact of auto and gas sales, rose by a better-than-expected 12.4 percent. These strong results and the better-than-expected increase in consumer confidence in June indicate that despite the massive disruption caused by the pandemic, consumer spending may be poised for a faster rebound than originally anticipated. Given the fact that consumer spending accounts for roughly two-thirds of overall economic activity, this report was very encouraging regarding second-quarter economic growth and the pace of the economic recovery. Tuesday also saw the release of May’s **industrial production** report. Production rose by less than expected during the month, increasing by 1.4 percent against calls for a 3 percent gain. This follows a downwardly revised 12.5 percent decline in April that marked the worst single month decline for production since records began in 1919. Manufacturing output also came in below expectations, increasing by 3.8 percent in May against forecasts for 5 percent growth. While the reopening of factories served as a tailwind for industrial production in May, lowered global demand and disrupted supply chains are expected to serve as a headwind for faster production growth for the time being. This disappointing result in May indicates that the road to recovery for the industrial sector is likely going to be more difficult than the path back for service-based sectors. Tuesday’s third major release was the **National Association of Home Builders Housing Market Index** for June. This measure of home builder confidence also increased by more than expected. It rose from 37 in May to 58 in June, against expectations for a more modest increase to 45. This is a diffusion index, where values above 50 indicate a favorable view on home sales. So, this was an especially impressive beat as it brought home builder confidence to levels that have historically been associated with an increase in new home sales. This report also marked the largest single-month increase for the index on record, as home builders cited significantly higher prospective home buyer interest and foot traffic during the month as major drivers of increased confidence. There is still a long way to go to get back to the recent high of 78 set in December, but this better-than-anticipated report is a good sign for future home construction as we enter the summer months. Speaking of new home construction, on Wednesday, May’s **building permits** and **housing starts** reports were both released. Here, the news was a bit disappointing, as both measures of new home construction came in below expectations. Starts rose by 4.3 percent, against forecasts for a 23.5 percent increase. Permits rose by a more encouraging 14.4 percent during the month, against calls for a 16.8 percent increase. New home sales were one of the surprising bright spots in the economy in April, and additional supply would likely help meet renewed home buyer demand now that the worst of the pandemic appears to be largely behind us. While the increased pace of new home construction in May was welcome, it followed declines of more than 26 percent and 21 percent for starts and permits, respectively, in April. Clearly, we have a long way to go before getting back to pre-pandemic levels for new home construction. But the better-than-expected home builder confidence for the month gives hope for a swift rebound in new home construction in June. We finished the week with Thursday’s release of the **initial jobless claims** report for the week ending June 13. An additional 1.508 million initial unemployment claims were filed during the month, against expectations for 1.29 million initial claims. This was down from an upwardly revised 1.566 million initial claims the week before. Continuing unemployment claims also disappointed, coming in at 20.544 million, against expectations for a further decline down to 19.85 million. Despite the reopening efforts and the better-than-expected May employment report, the pace of initial and continuing claims still remains stubbornly elevated. With that being said, this marks the 11th straight week with declining initial jobless claims, which indicates that the worst of the damage to the jobs market is likely behind us, despite the higher-than-usual level of initial and continuing claims. ##### What to look forward to On Monday, May’s **existing home sales** report was released. Sales of existing homes fell by 9.7 percent during the month, against expectations for a 5.6 percent decline. Following a 17.8 percent decline in April, this disappointing result brought the annualized pace of existing home sales down to a nine-year low of 3.91 million. The declines were geographically widespread, with sales down by double digits on a year-over-year basis across all four major regions of the country. Before the pandemic hit, existing home sales showed solid growth in 2019 and the first two months of the year, peaking at an annualized rate of 5.76 million in February. With mortgage rates near a three-year low and consumer confidence stabilizing in June, we can hope that home sales may rebound in the upcoming months. As May’s disappointing results showed, however, the disruption to the housing market caused by the pandemic was severe. It’s likely that the pace of home sales will take some time to recover to pre-pandemic levels. We’ll get another look at the housing market with Tuesday’s release of the May **new home sales** report. New home sales are expected to rise by 1.1 percent in May, after posting a surprise 0.6 percent increase in April. New home sales are a smaller and often more volatile portion of the housing market compared with existing home sales, but the anticipated increase would still be a positive sign for the overall market. Once again, the combination of low rates and improving consumer demand is expected to serve as a tailwind for new home sales as we head into the summer months. One key area to monitor will be the pace of new home construction, as the slowdown here due to the pandemic may serve as a temporary headwind to new home sales, especially in supply-constrained markets. With that being said, the better-than-expected June home builder confidence figures should support faster new home construction, which in turn would likely help boost new home sales. Thursday will see the preliminary **durable goods orders** report for May. Durable goods orders are expected to increase by 10.5 percent during the month, following a 17.7 percent decline in April. Much of the anticipated increase can be attributed to transportation orders, which can be especially volatile on a month-to-month basis. Core durable goods orders, which strip out the impact of transportation orders, are set to increase by 2.5 percent during the month, following a 7.7 percent decline in April. Core durable goods orders are often seen as a proxy for business investment, so while this anticipated increase would be a positive development, it would indicate business spending will likely face a longer path back to pre-pandemic levels compared with consumer spending, which has already showed signs of a swifter rebound. Thursday will also see the release of the weekly **initial jobless claims** estimate for the week ending June 20. Economists expect to see initial claims fall for the 12th week in a row, down to 1.3 million from just more than 1.5 million the week before. While continued declines for initial claims would certainly be welcome, the pace of declines has slowed over the past few weeks, indicating that the jobs market is still facing significant stress despite reopening efforts. We will continue to monitor these weekly releases until we see claims returning to historically normal levels. On Friday, May’s **personal income** and **personal spending** reports are set to be released. Incomes are expected to fall by 6 percent during the month, following a surprising 10.5 percent increase in April. Incomes were boosted by one-time CARES Act payments in April, which are not expected to have a meaningful effect in May. Spending is set to increase by 8.6 percent, partially offsetting a 13.6 percent decline in April that was the worst single-month decline for personal spending since records began in 1959. As we saw with the May retail sales report, consumers are expected to have a healthy appetite to spend more as reopening efforts began across the country during the month. Once again, while the anticipated increase in spending would certainly be a welcome development, it will likely take some time to recover from the disruption to consumer spending caused by the pandemic, even if the pace of recovery may well be faster than originally anticipated. Finally, we’ll finish the week with Friday’s release of the second and final estimate of the **University of Michigan consumer sentiment** survey for June. Economists expect to see the index remain unchanged from the midmonth preliminary estimate of 78.9. If estimates hold, this would be a solid increase for the index from 72.3 in May. This result would also be higher than initial estimates for an increase to 75 in June. The much-better-than-expected May jobs report and equity market rebound likely contributed to this better-than-expected preliminary result. Improving consumer sentiment has historically supported faster consumer spending growth, so a continued rebound for this index would bode well for June’s spending figures. While the anticipated increase for the index would be welcome, confidence would still sit well below the recent high of 101 we saw in February, so there is still a lot of work to be done to fully restore consumer sentiment. That’s it for this week—thanks for reading and stay safe! - [Tweet](https://twitter.com/share) ### Subscribe via Email ![TMO\_IMO\_615x408\_sidebar](https://blog.commonwealth.com/hs-fs/hubfs/TMO_IMO_615x408_sidebar.png?width=1033&height=686&name=TMO_IMO_615x408_sidebar.png "TMO_IMO_615x408_sidebar") [Episode 20](https://vimeo.com/1201911815/0f4f028be9?share=copy&fl=sv&fe=ci) June 17, 2026 [Episode 19](https://vimeo.com/1191658257/1b43ce84dd?share=copy&fl=sv&fe=ci) May 13, 2026 [Episode 18](https://vimeo.com/1183174918/e227cf7d80?share=copy&fl=sv&fe=ci) April 15, 2026 [Episode 17](https://vimeo.com/1174554734/636f0f7aba?share=copy&fl=sv&fe=ci) March 18, 2026 [Episode 16](https://vimeo.com/1163757312/bc2f802d74?share=copy&fl=sv&fe=ci) February 11, 2026 [More](https://learn.commonwealth.com/monthly-media-placements) [![Insights\_CTA\_IMO\_233x400-1](https://no-cache.hubspot.com/cta/default/295024/interactive-187935228457.png)](https://blog.commonwealth.com/hs/cta/wi/redirect?encryptedPayload=AVxigLLx6WInyNh5%2B8rDRL%2FwK%2Bzdlm%2BmqHSPB4jqxT18fi246O%2B5KaErKGDkSwLiDV6REI6D55TdkonjmbPpX%2BP4lNGmpL7NnXVu79oROyw%2Bd2Tq28Cz0kdTKTDe0J30mA9YOf7XjXM7ybV4kpO8j2%2BUATHS8jWidCfEfUfFEbMRe1aRWeu00GCaOkQzqc%2FxgaIfwz%2FJhtio9tOkeXQ%3D&webInteractiveContentId=187935228457&portalId=295024) ### Hot Topics Select Category Ask Brad Commentary Economic Risk Factor Updates Economics Lessons Market Thoughts Videos In the News Investing Market Updates On My Bookshelf Politics and the Economy [![New Call-to-action](https://no-cache.hubspot.com/cta/default/295024/5f46d9ce-4d40-495c-a126-d4502b647bbf.png)](https://cta-redirect.hubspot.com/cta/redirect/295024/5f46d9ce-4d40-495c-a126-d4502b647bbf) ### Archives - 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