Economy

Retail Sales Pull Back in May

Retail Sales Pull Back in May”

Retail sales were unchanged when not including auto sales and the price of gasoline.

Retail sales are a big component of consumer spending, which in turn accounts for roughly two-thirds of USA economic output. Although much of the decline is related to structural issues, generally subdued retail sales data will increase the risk of further job losses over the next few months.

April's retail sales were unchanged at 0.4%.

"The retail sales report for May was disappointing". 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. May's surprise sluggishness in consumer spending, which accounts for more than two-thirds of the US economy, could worry Federal Reserve officials who have previously attributed the slowdown in domestic demand to transitory factors.

Americans cut spending at gas stations, department stores and electronics shops in May as retail sales registered their biggest drop in 16 months, a cautionary sign for the economy. Still, the USA central bank is expected to raise interest rates by 25 basis points later on Wednesday, the second increase this year. Core retail sales are related most closely to the consumer spending component of GDP, and were reported to increase 0.2% in April. Electronic store sales were down, however (1.8 percent), as were department stores (3.7 percent) and sporting goods, hobby, book and music stores, off 4.7 percent for the year. By category, the sharpest drop came in electronics (-2.8%), following two months of decent gains.



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