United States: Retail sales shrink in May
June 14, 2017
Retail sales in the U.S. surprised to the downside in May as they decreased 0.3% from the previous month. This marked a notable contrast to April’s 0.4% expansion and confounded market analysts, who had expected retail sales to behave much better at a 0.1% increase. The erratic performance of retail sales so far this year highlights weak consumer spending despite a tightening labor market and points to a potentially weaker rebound in GDP growth in Q2 than at first expected.
The report from the Department of Commerce showed that May’s sales values were hampered by low gasoline and phone prices. Indeed, the largest declines were recorded in gasoline stations and electronics and appliance stores. Sales at motor vehicle and part dealers also fell in May, a contrast to the sector’s strong performance in April. In a better note, while core sales—excluding autos and gasoline—stagnated in May, strong revisions to both March and April more than made up for this report’s weakness.
On a year-on-year basis, growth in retail sales eased markedly from a revised 4.6% in April (previously reported: +4.5% yoy) to 3.8% in May, the lowest reading since November of last year. Compared to the same month last year, sales at department stores continued to steadily decline in May (-3.7%), while sales at non-store retailers—a proxy for e-commerce sales—printed yet another double-digit expansion (+10.2%). Non-store retailers continue to thrive as consumers increasingly migrate away from physical stores to online outlets.
Author: David Ampudia, Economist