EmailRetail sales fell 0.2% in May after declining by the same amount in April. The Briefing.com consensus expected retail sales to fall 0.2%. The May employment report foreshadowed a rough month for retail sales. Payroll growth was weak and was not enough to offset a drop in weekly hours. As a result, aggregate income levels fell modestly in May. With income levels declining, an increase in consumption would have to come out of savings. With consumer confidence trending lower, a drop in savings looked unlikely.
Unless income picks up in June, sales will likely fall for a third consecutive month. Even though motor vehicle manufacturers reported a slowdown in the number of motor vehicles sold in May, motor vehicle and parts dealers saw sales rise 0.8% in May. That was up from 0.1% growth in April. Excluding motor vehicles, retail sales dropped 0.4% in May, down from a 0.3% decline in April. Excluding autos, the consensus expected no change in retail sales. Surprisingly, core sales growth – which excludes the highly volatile auto dealers, building materials and supply dealers, and gasoline stations – was flat in May after increasing 0.1% in April. That bodes well for future consumption growth if income levels can manage to stabilize.
