• Retail sales rose 0.5% in May, slightly under the median survey estimate for 0.6%. The bigger story was the size of the revision to April, which was revised from -0.2% in the advance reading to +0.3%.
  • Excluding the most volatile components (gas, autos, building materials, and food services), the retail sales ‘control group’ rose 0.5% (ahead of expectations for 0.4%), and was revised up from a flat reading in April to +0.4%.
  • Most sub-categories gained in the month, with non-store retailers (+1.4%) leading the way. Other big gainers were electronics and sporting goods (both up 1.1%), motor vehicles and parts and general merchandise (both up 0.7%). Pulling back in the month were sales at miscellaneous (-1.3%), department stores (-0.7%), and food and beverage stores (-0.1%). Declines in these categories in May followed solid gains in April.

Key Implications

  • Wow. With robust growth in May and huge upward revisions to April’s print, consumer spending looks to regain its footing in the second quarter with growth looking to exceed the 3% (annualized) mark.
  • Business sentiment has taken a hit lately, but consumer sentiment has held up well. As long as job growth continues (even if at a somewhat slower rate from the past year), the fundamentals will remain in place for consumers to drive economic growth.
  • Indeed, with credit spreads remaining tight and treasury yields falling, households are benefiting from lower borrowing costs, which should support the housing market and spending on related items (including autos) in the months ahead.


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