U.S. Retail Sales Rebound in June; Jobless Claims and Fed Survey Signal Mixed

Philadelphia Fed Manufacturing Survey Turns Positive

The Federal Reserve Bank of Philadelphia’s July Manufacturing Business Outlook Survey showed a rebound in regional factory activity. The general activity index climbed to 15.9—its highest since February—after three months of contraction. New orders rose to 18.4, and shipments surged to 23.7. Employment also rebounded, with the index hitting 10.3, and 17% of firms reporting hiring increases. Price pressures remain elevated: the prices paid index jumped to 58.8 and prices received climbed to 34.8, pointing to broad-based cost inflation. Forward-looking indicators remained positive, though the employment outlook dipped slightly.

Retail Strength Balancing Labor Soft Spots and Cost Pressures

The June rebound in retail sales provides a constructive signal for consumer-driven sectors, particularly discretionary and online retail. However, persistent inflationary pressures and a modest rise in continuing claims suggest caution in interpreting labor strength. The mixed signals from the Philadelphia Fed survey—improving orders and output but sticky price gains—complicate the outlook for interest rates and corporate margins.

Market Forecast: Cautiously Bullish Near Term

The combination of stronger retail spending, a still-resilient labor market, and improving regional manufacturing data supports a cautiously bullish near-term view for equities, particularly in consumer discretionary and industrials. However, traders should remain alert to inflation stickiness and possible softening in job retention trends, especially in manufacturing-heavy states. Barring surprises from upcoming inflation data or Fed commentary, near-term equity momentum remains constructive.