U.S. retail sales unexpectedly increased last month as the economy slowly reopened and pandemic restrictions were lifted, exceeding expectations from Wall Street analysts.

Retail sales rose a seasonally adjusted 0.6 percent in June from the month before, the Commerce Department reported Friday. May data revealed that sales fell by a revised 1.7 percent.

The rebound in sales comes as motor vehicle purchases have dropped due to a supply shortfall triggered by a global semiconductor shortage. That’s pushed auto consumers to pivot to used cars and trucks, which has helped cause inflation.

“Many retailers are benefiting from increased traffic in stores as well as higher prices for items on the shelves, a much-needed bounce back for many service sector businesses,” Ben Ayers, senior economist at Nationwide in Columbus, Ohio, told CNBC.

“With the increasing chatter around a potentially stalled economic recovery due to the new delta strain, month over month spend was relatively flat following the spring spending spree which is not a cause for concern, rather a shift to 2019 pre-pandemic levels,” Jonathan Silver, CEO and founder of Affinity Solutions told U.S. News & World Report. “The next few weeks will determine if we popped the cork prematurely towards the end of the pandemic and the hope for a quick economic recovery.”

The department’s most recent data indicated that spending has shifted from goods like electronics and motor vehicles during the pandemic as millions of people worked from home to services like travel and entertainment. Retail sales have also picked up, with services like healthcare, education, travel and hotel stays making up a large portion of consumer spending.

A surge in coronavirus vaccinations, low interest rates and loads of federal stimulus money have also pushed consumers to spend.

Sales at bars and restaurants rose 2.3 percent, while clothing store sales increased by 2.6 percent. Sales at electronic shops also went up 3.3 percent.

“With the economy re-opening, services spending has begun to pick up and could pull some spending away from goods toward some services that are not captured in the retail sales report,” Kevin Cummins, chief U.S. economist at NatWest Markets in Stamford, Connecticut, told the network.

But auto dealerships saw a two percent decline in sales due to the shortage of chips, which are needed to power car screens and other related technology.

Furniture stores saw the widest drop in sales, as they fell 3.6 percent in June.

Rachel Bucchino is a reporter at the National Interest. Her work has appeared in The Washington Post, U.S. News & World Report and The Hill.

Image: Reuters