Retail sales up slightly in May
Retail sales in May fell short of estimates but still pointed to an economy making slow progress.
Sales rose a modest 0.3% last month from April, according to the Commerce Department. That was only half of the 0.6% gain that economists projected.
The slowdown came after three straight months of sales increases as shoppers took a break from buying. But economists said consumers are coming back thanks to rising home equity and an improving job market.
“May sales were weaker than expected, but April and May taken together showed healthy growth,” said Sung Won Sohn, an economist at Cal State Channel Islands. “Job growth and rising consumer confidence have padded people’s pocketbooks.”
April’s figures were adjusted to a 0.5% gain, after initially being estimated at 0.1%.
The number of initial jobless claims rose to 317,000 last week, a slight uptick from the week before, the Labor Department reported Thursday. But the four-week average, which smooths out some volatility, recently hit its lowest level since June 2007, a sign that companies are keeping workers on to meet increased business.
Analysts say that consumer confidence has recovered after dipping late last year. Retail sales are considered a bellwether of consumer spending, which comprises two-thirds or more of U.S. economic activity.
“The trend has been toward stronger sales in more discretionary segments including vehicles dealers, building supply stores and furniture stores,” Scott Hoyt, economist at Moody’s Analytics, said in a statement.
May sales would have advanced only 0.1% without a strong showing from the auto sector. Excluding autos and gasoline, overall sales would have been flat.
Auto dealers had a 1.4% rise. Home furnishing stores enjoyed a 0.5% increase, and building materials and garden equipment vendors jumped 1.1%, one possible sign of rising housing prices.
Hoyt of Moody’s said one possible drag on sales may be modest income growth.
A few sectors reported dips in May. The government’s figures Thursday showed a 0.6% fall in sales at clothing and accessories stores. Electronics and appliances stores suffered a 0.3% slip. General merchandise stores, which include department stores, fell 0.6%.
Sales at gas stations were up 0.4%. Prices at the pump have fallen slightly since hitting highs in previous months as refineries switched to a more expensive summer blend of gas.
But revised figures for April showed far more consumer spending than previously estimated. The updated 0.5% figure far surpassed the government’s initial 0.1% estimate, suggesting that Americans opened their wallets in April as soon as the brutal winter weather had cleared.
That prompted enthusiasm from some economists, who say growth prospects are better than generally perceived.
“Consumers have not bought this much from your friendly neighborhood retailer or from over the Internet up in the clouds since early 2012,” wrote Chris Rupkey, an economist at Bank of Tokyo-Mitsubishi UFJ, in a report to clients. “Consumers may have dialed it back a touch in May, but overall spending for the second quarter is through the roof.”
Twitter: @ByShanLi
Twitter: @LATwalter
