United States: Retail sales grow at fastest pace in eight months in May
June 14, 2018
Retail sales expanded a robust 0.8% over the previous month in May, up from April’s revised 0.4% rise (previously recorded: +0.3% month-on-month) and markedly exceeding market expectations of a 0.4% growth print. After a weak first quarter, consumer spending has so far been stronger in Q2, supported by the recent tax reform and a pick-up in wage growth.
A breakdown of the May figure shows an improving performance across most sectors. Motor vehicle sales growth picked up significantly to 0.5% month-on-month in May, from a mild 0.2% expansion in April (previously reported: +0.1% month-on-month). On the other hand, furniture stores sales were one of the only two categories which recorded a decline in May, falling 2.4% mom after logging an upwardly revised 2.7% increase in April (previously reported: +0.8% mom). The other category recording a decline was sporting goods and hobbies stores sales (-1.1% mom). Meanwhile, food and beverage stores sales were flat in the month, while all other retail categories recorded growing sales, with most of them increasing the pace of growth compared to April.
Excluding autos and gas, retail sales expanded 0.8% in May, strengthening from April’s 0.3% print, and again significantly beating market expectations of a 0.4% rise.
In annual terms, growth in retail sales revved up to 5.9% in May, up from an upwardly-revised 4.8% in April (previously reported: +4.7% year-on-year). Annual average retail sales growth also edged up to 4.8% in May, from 4.6% in April.
The May data suggests that strong domestic dynamics are underpinning the expansion of the U.S. economy, with consumer spending following the virtuous cycle of a tightening labor market, leading to rising disposable incomes and stronger discretionary outlays. Higher gas prices could still dampen this momentum, although market indicators and statements from large oil producers in recent weeks suggest the upward trend in energy prices should moderate going forward.
Author: Joffrey Simonet, Economist