US retail sales rose in May
The Commerce Department said on Tuesday retail sales increased 0.5 per cent last month after surging by an unrevised 1.3 per cent in April. It was the second straight month of gains and lifted sales 2.5 per cent from a year ago.
Excluding cars, petrol, building materials and food services, retail sales rose a solid 0.4 per cent last month after an upwardly revised 1.0 per cent increase in April.
These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
They were previously reported to have risen 0.9 per cent in April. Economists polled by Reuters had forecast both overall retail and core sales gaining 0.3 per cent last month.
The fairly strong May retail sales report could see economists raising their second-quarter GDP growth estimates, which are currently around a 2.5 per cent annualised rate. The economy grew at a 0.8 per cent rate in the first quarter.
Tepid employment gains in May stirred concerns about the health of the economy. But so far, data on first-time applications for unemployment benefits suggests labor market strength remains intact.
In May, car sales rose 0.5 per cent after racing 3.1 per cent in April. Receipts at service stations increased 2.1 per cent, reflecting recent increases in petrol prices.
Sales at clothing stores increased 0.8 per cent, the largest gain since November. Online retail sales shot up 1.3 per cent.
Receipts at sporting goods and hobby stores jumped 1.3 per cent last month. Restaurants and bars sales climbed 0.8 per cent.
Sales at electronics and appliance outlets gained 0.3 per cent. But sales at building materials and garden equipment stores fell 1.8 per cent after declining 2.0 per cent in April.
Furniture store sales dipped 0.1 per cent.
“Looking behind the numbers reveals an interesting trend in that the slowdown appears to have come from bigger ticket sectors,” said Neil Saunders, CEO of retail consultant firm, Conlumino.
“Automotive is the most obvious area, with car sales down by around 15.6 per cent in unit terms on the prior year. Within retail, the previously good growth in furniture sales has gone into reverse with furniture and home stores reporting a 0.8 per cent decline in year-over-year revenues.”
Saunders said this trend fits neatly with recent consumer confidence data which shows a very mixed picture of sentiment – where people are more satisfied with their own personal financial positions, but less confident about the future of the economy.
“When this is the case consumers tend to be more cautious about bigger purchases, many of which are bought on credit and paid off over a period of time. Less affected are the everyday and smaller purchases, which consumers still feel comfortable making,” Saunders added.