Retail sales showed positive momentum to varying degrees in May, according to data released today by the United States Department of Commerce and the National Retail Federation (NRF).
Commerce reported that May retail sales at $421.1 billion were up 0.6 percent over April and up 4.7 percent compared to May 2012. Total sales for the March through May period were up 3.7 percent annually.
The NRF reported that May retail sales, which exclude autos, gas stations, and restaurants, rose 0.6 percent on a seasonally-adjusted basis from April and were up 4.3 percent on an unadjusted basis annually. NRF officials said that improving consumer confidence and spending helped spur the sequential and annual gains.
"Stronger employment data and increasing home and equity prices lifted confidence and spending this spring," NRF Chief Economist Jack Kleinhenz said in a statement. "The economy is improving, albeit slowly, but we still have a long way to go. Stagnant salaries continue to constrain further economic acceleration. While sequester and tax increases dampened sales growth in the first quarter, it appears that the economy absorbed most of the blow."
As previously reported, with retail sales growth modest at best, there still remains a mixed bag of signals and headwinds on the economic front, including a slightly declining unemployment rate, improving consumer confidence data, as well as encouraging automotive sales and housing data.
These things continue to occur, though, against the backdrop of sluggish GDP growth and general uncertainty regarding the economy.
The continuing trend of slight or flattish sequential retail sales increases remains largely intact due to fairly even retail spending at a time when retailers remain cautious on the inventory planning side and postponing commitments until the until the economic outlook becomes clearer, while they are risking stock outages by having very lean inventories.
"These numbers look pretty decent overall," said Eric Starks, president of freight transportation consultancy FTR Associates. "It is an environment where things are moving along and the consumer continues to spend but at the same time things are by no means red hot either. It is pretty consistent in terms of our general expectations and where the general economy has been and where we expect it to go over the next six months."
IHS Global Insight Senior Economist Leslie Levesque observed in a research note that May's report showed another month of strong sales at nondiscretionary retailers and losses at discretionary retailers.
"Apart from autos, consumers are staying away from big-ticket purchases and are buying more of what they need rather than what they want," said Levesque. "However, consumers have been gaining confidence. The outlook on labor market conditions has improved and consumers are considerably more optimistic in their economic outlook. There are several positives on the consumer front: inflation is low, gasoline prices have been accommodative, the housing market is looking brighter and the stock market is strong. Looking ahead, we expect real consumer spending growth in the 2.0 percent -2.5 percent range for the year."
