WASHINGTON US retail sales were unchanged in June and the underlying trend was strong, which could boost economic growth estimates for the second quarter.

The flat reading in retail sales last month followed an upwardly revised 0.3% gain in May, the Commerce Department's Census Bureau said on Tuesday.

Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, falling 0.3% after a previously reported 0.1% gain in May.

Still, the outlook for sales is unfavourable.

Households are becoming more price sensitive and focusing on basic needs, evident in earnings reports from major retailers and manufacturers.

PepsiCo chief executive officer Ramon Laguarta said last week lower-income consumers were "stretched" and "strategising a lot to make their budgets get to the end of the month".

Most households have run down the excess savings accumulated during the Covid-19 pandemic and are carrying a lot of credit card debt, which is becoming more expensive as interest rates remain elevated. Wage growth is also moderating as the labour market cools. Nonetheless, the pace of consumer spending remains sufficient to keep the economic expansion on track.

Retail sales excluding automobiles, gasoline, building materials and food services surged 0.9% last month after rising 0.4% in May. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

Growth estimates for the April-June quarter were around a 2% rate before the retail sales data. The economy grew at a 1.4% rate in the first quarter.

  - Reuters