A new report from the U.S. Census Bureau showed that advance estimates of retail and food services sales in May totaled $502.0 billion. That was a 0.8 percent increase from April’s upward-revised print, the fourth monthly gain in a row, and significantly better than expected. “Core” retail sales, which exclude the volatile automobile and gasoline components, also increased by 0.8 percent in May, double the gain economists anticipated.
More importantly, the sales gains were broad-based last month, with 10 of the 13 major retail categories showing increases in May, including notable strength seen at clothing stores and building-materials vendors. Altogether, this was an encouraging report that suggests consumer spending this quarter is continuing to rebound following Q1’s post-holiday slump. Higher gasoline prices could be a problem down the road but for now larger tax refunds and rising wages have helped offset this potential headwind.
Sources: Econoday, U.S. Census Bureau, Bloomberg, FRBSLPost author: Charles Couch