May Retail Sales


The largest component of personal consumption fell in May, and the stock market responded positively.  The positive acknowledgement came from the fact that the figure fell less than expected.  Retail sales fell 0.2 percent according to the U.S. Census Bureau after April’s figure was revised lower to 0.3 percent from an original report of 0.5 percent.  This is the first decline since June 2010.

Auto sales led the indicator lower by falling 2.9 percent. Other areas of decline include substantial sub-categories like electronics/appliance stores, furniture/home furnishing, and food/beverage. They were down in percentages 1.3, 0.7, and 0.5 respectively.  Leading the gains were miscellaneous store retailers.  While this description is vague, it does not seem like the type of category by which an economy should be led.  Non-store retailers grew 1.2 percent.  Building materials and restaurants rounded out the report’s leadership with gains of 1.2 percent and 0.6 percent respectively.

Having gained 7.7 percent over the past year, the overall trend in retail sales remains positive, but the rate of growth has been moderating in recent months after a strong progression throughout the first quarter of 2011.  In a consumer led economy, this indicator carries a lot of significance.  It will need to maintain its upward movement if the economy is to continue to grow.  The recent weakness will be closely watched.  Should it deteriorate, you will hear about it from Atlas.