Gain in Retail Sales Suggests Slowdown Was Temporary
A pickup in U.S. retail sales last month adds to signs of steady consumer spending that will help propel the economy after a first-quarter slowdown, Commerce Department data showed May 12.
Highlights of Retail Sales
• Purchases rose 0.4% (forecast was 0.6% rise) after a 0.1% increase the prior month (revised from 0.2% decline).
• Retail control-group sales, which are used to calculate GDP and exclude the categories of food services, auto dealers, building materials outlets and gasoline stations, rose 0.2% after a 0.7% March gain that was the biggest since April 2016.
• Sales rose in nine of 13 major retail categories.
Key Takeaways
Including the revision, the retail figures were close to estimates and show little more than steady demand at the start of the second quarter. The caveat was the smaller-than-expected 0.2% advance in so-called core sales.
While the Commerce Department data capture only a small part of consumer purchases, household spending on services probably has kept up a solid pace amid more seasonal temperatures. The figures also might be a sign that delayed tax refunds in 2017 are beginning to make their way to Americans’ wallets, providing additional support in the months ahead.
The Commerce data don’t reflect changes in prices, and consumers weathered a spike in gasoline prices in April. Fuel costs have since declined.
Economist Views
“The backdrop is generally favorable for consumers, with an unemployment rate of 4.4%, gradually improving wage pressures, low borrowing costs and high household wealth,” Michelle Meyer and other Bank of America economists wrote in a note before the data.
Other Details
• Purchases at auto dealers and service stations increased 0.7%; industry data showed sales of cars and light trucks rose in April to a 16.8 million pace after March’s 16.5 million rate was the slowest in more than two years.
• Retail sales excluding autos rose 0.3% for a second month.
• Sales at merchants of electronics and appliances rose 1.3% in April after a 2.2% jump.
• Purchases also improved at internet retailers, restaurants, sporting goods stores and building materials outlets.
