Tags: Retail | Sales | Consumer | spending | economy

Retail Sales Slide 0.3 Percent in Biggest Drop in 16 Months

Image: Retail Sales Slide 0.3 Percent in Biggest Drop in 16 Months
Joingate/Dreamstime

Wednesday, 14 Jun 2017 09:52 AM

U.S. retail sales recorded their biggest drop in more than a year in May amid declining purchases of motor vehicles and discretionary spending, which could temper expectations for a sharp acceleration in economic growth in the second quarter.

The Commerce Department said on Wednesday retail sales fell 0.3 percent last month after an unrevised 0.4 percent increase in April. May's decline was the largest since January 2016 and confounded economists' expectation for a 0.1 percent gain.

Retail sales rose 3.8 percent in May on a year-on-year basis. Some of the drop in monthly retail sales reflected lower gasoline prices, which weighed on receipts at service stations.

Excluding automobiles, gasoline, building materials and food services, retail sales were unchanged last month after an upwardly revised 0.6 percent rise in April.

These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product and were previously reported to have increased 0.2 percent in April.

Growth is expected to pick up this quarter after being held back by a near stall in consumer spending and a slower pace of inventory investment at the start of the year.

The economy grew at a 1.2 percent annualized rate in the first quarter after notching a 2.1 percent pace in the October-December period.

The Atlanta Fed is forecasting the economy growing at a 3.0 percent annualized rate in the second quarter, but this estimate could be trimmed following the weak core retail sales.

May's surprise sluggishness in consumer spending, which accounts for more than two-thirds of the U.S. economy, could worry Federal Reserve officials who have previously attributed the slowdown in domestic demand to transitory factors.

Still, the U.S. central bank is expected to raise interest rates by 25 basis points later on Wednesday, the second increase this year. Further rate hikes are likely to depend on the outlook for inflation and economic growth.

Auto sales fell 0.2 percent after rising 0.5 percent in April. Receipts at service stations dropped 2.4 percent, the largest decline since February 2016. Sales at building material stores were unchanged, while receipts at clothing stores rose 0.3 percent.

Department store sales tumbled 1.0 percent, the largest drop since July 2016. Department store sales are being undercut by online retailers, led by Amazon.com. That has led some retailers, including Macy's, Sears and Abercrombie & Fitch to announce shop closures.

Sales at online retailers increased 0.8 percent last month after rising 0.9 percent in April. Sales at electronics and appliance stores plunged 2.8 percent, the largest drop since March 2010.

Receipts at restaurants and bars dipped 0.1 percent, while sales at sporting goods and hobby stores fell 0.6 percent.

© 2017 Thomson/Reuters. All rights reserved.

   
1Like our page
2Share
Economy
U.S. retail sales recorded their biggest drop in more than a year in May amid declining purchases of motor vehicles and discretionary spending, which could temper expectations for a sharp acceleration in economic growth in the second quarter.
Retail, Sales, Consumer, spending, economy
441
2017-52-14
Wednesday, 14 Jun 2017 09:52 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved