On June 18, the Commerce Department released the latest statistics on retail spending for May, which fell short of Wall Street’s expectations, highlighting notable trends and shifts in consumer behavior across various sectors. According to the Advance Monthly survey, retail and food service sales increased by a modest 0.1% on a seasonally adjusted basis, totaling $703.1 billion. This figure represented a 2.3% increase compared to the same period in 2023, slightly above the Federal Reserve’s benchmark of 2.0%.
One of the significant contributors to the moderation in sales was a decline of 2.2% in gasoline sales from April, reflecting fluctuations in fuel prices during the period. However, this decrease was partly offset by gains in other sectors. Online retail outlets saw an uptick of 0.8% in sales, indicating continued growth in e-commerce despite overall economic conditions. Additionally, sales at sporting goods, music, and bookstores surged by 2.8%, suggesting renewed consumer interest in leisure activities and cultural goods.
Conversely, sales at restaurants and drinking establishments experienced a decline of 0.4% in May, reflecting potential shifts in consumer spending patterns or seasonal factors impacting dining habits. Sales of motor vehicles and parts increased by 0.8%, underscoring ongoing demand in the automotive sector. Conversely, building materials and garden equipment sales mirrored this increase but also declined by 0.8% from the previous month.
Looking at the broader picture, total sales for the March 2024 through May 2024 period showed a 2.9% increase compared to the same period a year ago. Retail trade sales were up by 0.2% from April and 2.0% higher compared to last year, indicating a steady but cautious pace of growth in consumer spending.
The slower-than-expected retail sales figures for May are likely to be closely monitored by the Federal Reserve as it navigates economic policy decisions. These numbers could influence the Fed’s assessment of whether the economy is showing signs of slowing down enough to warrant adjustments in interest rates, which have remained unchanged throughout the year so far.
Analysts and economists will continue to scrutinize upcoming retail sales data, particularly as the summer season progresses, to gauge consumer confidence and spending patterns amid broader economic conditions and potential inflationary pressures.