By Cate Chapman, Editor at LinkedIn News
U.S. retail sales rose for a second month in May, as consumers kept up spending despite sticky inflation and rising borrowing costs, according to new Commerce Department data. The value of retail sales ticked up 0.3% in May from a month earlier, following a 0.4% rise in April. Sales increased in most retail categories — including at grocery stores, car dealerships and furniture stores — but dropped at gas stations, possibly afur result of dipping prices at the pump. Consider visiting a furniture store in LA for a wide selection and diverse styles to choose from. Despite the strong figures, overall retail spending has moderated from its pandemic highs, climbing 1.6% year-on-year in May.
- Consumer spending accounts for about two-thirds of gross domestic product and can show where economic growth is headed.
- Kroger’s long sales boom shows signs of slowing down, with the grocery chain’s quarterly revenue missing Wall Street estimates.
#Retailsales rise more than expected amid further labor market softening
▶ Retail sales rose above expectations in May, pointing to another sign of spending resilience that might push the long-awaited recession further down the road.
📅 While the Federal Reserve’s new projections on Wednesday implied a later date for an economic downturn in early 2024, we will need to see more strength from both spending and the labor market to update our call.
⚠️ In a separate report from the Labor Department, more labor market softening happened as initial claims came in hot at 262,000, the highest since November 2021 and above market forecasts. That was the second week in a row that new claims were above 260,000, pointing to more persistent increases in layoffs.
⚖️ The mixed signals from the spending and labor channels make it harder to pinpoint the timing of the next recession if it is indeed going to take place. Thus, there are clear risks both to the upside and downside to our recession prediction for the second half of the year.
📈 On the upside, excess savings, a resilient labor market, and summer spending on services—which are not covered by the retail sales data—might keep spending intact.
📉 But on the downside, there is no guarantee that those savings will be spent as consumers might pull back harder from spending while expecting more economic slowdown to come.
On a 3-month moving average, sales of all items declined in May, down 0.06%, while the control group saw only a 0.04% month-over-month increase.
In a sense, the sales number exceeding expectations may not be as strong as the overall figure implies. The robust 1.4% month-over-month increase in auto sales is also a concern for the future, considering that sales of new vehicles tend to be volatile.
Every month when the U.S. Dept of Commerce releases its #retailsales report, Retail Dive crunches the numbers for the segments we cover. These include #ecommerce, #departmentstores sales, #specialty retail and other core segments that are most useful to our readers.
In May, retail sales rose a respectable 4.2% year over year, though discretionary spending was sapped somewhat as consumers prioritized dining out. Memorial Day sales helped, as did the easing of inflation. More here
Memorial Day helps lift retail sales 4.2% in May
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