Retail Sales Creep Up a Meager 0.1% for May

Retail sales grew a lackluster 0.1% in May, the government said Wednesday in a report that analysts predicted should help ease fears of inflationary pressures in the economy.

The Commerce Department said sales by retailers, which represent about one-third of U.S. economic activity, edged up a scant 0.1% in May to $131.9 billion, after a 0.4% drop in April.

Much of the slowdown came from two successive drops in auto sales, but other categories, including department store sales, also were anemic.

“If you put the two months together, there is not much evidence of strength,” said Sandra Shaber, an economist with the Futures Group, a Washington-based consulting firm. “Department store sales, which are a major barometer, continue to be very weak.”

But Shaber and other analysts said slack consumer spending, while bad for retailers, is good for the economy as a whole because it should calm the inflation jitters that had troubled financial markets earlier this year.

Economists have been looking toward rising export sales as a cure for the swollen U.S. trade deficit. However, retail sales jumps of 1.6% in March and 1.1% in February fueled concern that prices would rise as manufacturers found it difficult to meet demand from both foreign and American consumers.

Good for Economy

“Following the February and March surge, retail sales have settled into a comfortable tempo. This should allay fears that Americans are indulging in an orgy of overconsumption which will make it impossible to drive down the trade deficit,” Richard W. Rahn, chief economist of the U.S. Chamber of Commerce, said in a statement.

“The retail sales report is painting a picture of a slowdown in consumption from the first quarter, but this is something that is good for the economy,” said Tom Megan, senior financial economist with Evans Economics in Washington. “As the current account numbers point out, we have to reorient the economy from consuming to exporting.”

It was the sixth increase in retail sales in seven months, but it was the second consecutive weak report.

And, because the figures are not adjusted for inflation, Megan said, strong sales totals in two categories--food and specialty clothing--likely reflect price increases rather than actual gains in sales volume.

Sales in May were held back by a 1.2% fall in automotive sales to $29.3 billion. That followed a 0.8% drop in April.

Excluding autos, sales rose 0.5% in May following a 0.3% decline.

Sales of durable goods, “big ticket” items expected to last three or more years, were down 0.6% in May, while non-durable goods were up 0.5%.