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United States Retail May 2023

United States: Retail sales beat market expectations in May

Retail sales grew 0.3% month-on-month in seasonally-adjusted terms in May (April: +0.4% mom). The reading confounded market expectations for a small decline. Looking at the details of the release, motor vehicle and parts dealers sales accelerated in May, and food and beverages sales also gained momentum. Meanwhile, general merchandise stores sales and non-store retailers sales lost pace, while gasoline stations sales contracted at a steeper pace than in the prior month.

On an annual basis, retail sales grew 1.6% in May, which was above April’s 1.2% expansion. Meanwhile, annual average retail sales growth fell to 6.4% in May (April: +7.1%).

Moreover, consumer spending on goods and services rose 0.8% month on month in April. Taken together both consumer spending and retail sales data paints a positive picture of economic activity for Q2, with the robust labor market and falling inflation providing support.

On the outlook, TD Economics’ Shernette McLeod said:

“A historically strong labour market will continue to support spending, and likely put a floor on any pullback, even as consumers become more cautious and selective in spending patterns. Overall, spending will remain a net positive for U.S. economic activity, even as it normalizes from pandemic induced distortions.”

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