United States: Retail sales accelerate in May while April data is revised upwards
Nominal retail sales rose 0.5% on a seasonally-adjusted month-on-month basis in May, up from the revised 0.3% rise recorded in April (previously reported: -0.2% month-on-month). Though the May print missed market expectations of a 0.7% increase, when including the revision to past month’s figures the data indicates much more upbeat consumer demand conditions than previously expected. Retail sales excluding automobiles, gasoline, building materials and food services—also known as “core” retail sales as they most closely reflect private consumption in the GDP readings—also rose a solid 0.5% mom, up from 0.4% in April.
This month’s reading was largely driven by a solid rebound in automobile sales—usually quite volatile from month to month—, electronics and appliances, and a milder rally in sales of building materials. Sales at non-store retailers—which includes e-commerce—also picked up steam, as did restaurant sales, while general merchandise stores continued to exhibit solid growth. On the other hand, gasoline sales lost considerable steam, but this was in part due to price effects as gas prices fell in the month, according to the May CPI reading.
In annual terms, growth in retail sales came in at 3.2% in May, down from 3.7% in April. Meanwhile, annual average retail sales growth fell from 4.3% in April to 4.1% in May.
Looking ahead, James Knightley, chief international economist at ING, noted that, although “there has been some softening in the recent economic data, […] we remain upbeat of the prospects for retail sales and consumer demand more broadly. Employment continues to grow and wages are rising, so households have money to spend. Asset prices remain robust as well so this is all helping to support consumer sentiment.”