Retail sales accelerated in May, rising 0.8%, the largest monthly advance since November 2017, the Commerce Department said Thursday. The Department also revised April’s numbers up to 0.4% from the previously reported 0.2% as the economy continues to show strength.
Economists expected a 0.4% increase. Year-over-year, May’s sales were up 5.9%.
According to Ibrahiim Bayaan, chief economist for FreightWaves, only 3 out of 13 retail industry groups posted declines in May. Those were furniture, food & beverage and sporting goods.
“The big gainers this month were clothing and accessories (+1.3% month-over-month) and building materials (+2.4%). Autos also had a really solid month, rising 0.5%,” he said.
“In a broader sense, the results today continue to support stronger economic growth in the second quarter,” Bayaan added. “The first quarter of 2018 showed some loss in momentum and a good deal of that was due to poor results in consumer spending on goods. April and May results have both been strong now, so it’s looking pretty clear that the second quarter will be much improved over the first.”
Bayaan said that the fundamentals for strong consumer spending remain solid with job growth and consumer confidence remaining high. Inflation is a slight concern with “rising prices negating some of the wage gains, but it still looks like the U.S. consumer is in a good place overall,” he said.
The National Retail Federation (NRF) says that its three-month moving average is up 4.6% over a year ago, besting its predicted 2018 retail sales forecast of between 3.8% and 4.4%.
“The economy is looking strong and households have a solid financial foundation on which to base their spending,” said Jack Kleinhenz, NRF chief economist. “We have seen ongoing momentum over the last several months and believe sales growth should remain healthy and consistent with our 2018 outlook. Nonetheless, inflation and rising oil prices are complicating the picture. And new tariffs or a trade war would certainly be negatives that would increase prices and reduce both consumer purchasing power and consumer confidence.”
NRF, which bases its numbers on data from the U.S. Census Bureau, broke out some key sectors that performed well. They are:
- Online and other non-store sales were up 9.1 percent year-over-year and up 0.1 percent over April seasonally adjusted.
- Clothing and clothing accessory stores were up 8.2 percent year-over-year and up 1.3 percent from April seasonally adjusted.
- General merchandise stores were up 5.6 percent year-over-year and up 1.2 percent from April seasonally adjusted.
- Building materials and garden supply stores were up 5.3 percent year-over-year and up 2.4 percent from April seasonally adjusted.
- Grocery and beverage stores were up 4.4 percent year-over-year and unchanged from April.
- Furniture and home furnishings stores were up 4.2 percent year-over-year but down 2.4 percent from April seasonally adjusted.
- Electronics and appliance stores were up 2.8 percent year-over-year and up 0.2 percent from April seasonally adjusted.
- Health and personal care stores were up 2.6 percent year-over-year and up 0.5 percent from April seasonally adjusted.
- Sporting goods stores were down 0.5 percent year-over-year and down 1.1 percent from April seasonally adjusted.
