Retail sales increase again in May as consumers continue to fuel economy

Retail sales rose again in May as consumers continued to spend despite economic challenges.

Retail sales in May increased  0.4% from April and were up 4.4% year over year, according to the National Retail Federation, whose calculation excludes automobile dealers, gasoline stations and restaurants to focus on core retail sales.

In April, core sales were up 0.6% month over month and up 1.4% year over year.

“This was a positive report with no sign of an abruptly slowing economy despite what has happened with inflation and interest rate pressures,” stated NRF chief economist Jack Kleinhenz. “Even though shoppers dialed back in some categories on a year-over-year basis, these numbers confirm that consumers still have the capacity to spend. “

Job growth and wages are providing buoyancy, although inflation continues to take a bite out of consumer income. 

“May is typically a strong month for retail as spring shopping hits its peak, but above-average temperatures and below-average precipitation no doubt played a favorable role,” added Kleinhenz. 

The  U.S. Census Bureau said overall retail sales in May were up 0.3% from April and up 1.6% year over year. Restaurant receipts increased 0.4%. In April, sales were up 0.4% month over month and up 1.2% year over year.

According to David Silverman, senior director, Fitch Ratings, the growth in month-over-month retail sales in May, while somewhat better than expected, support the theme of a “strong but softening consumer.”

“Discretionary categories like electronics, furniture and home improvement continue to show some of the weaker results with restaurants among the strongest, reversing pandemic-era behavior which benefitted these goods categories,” he said. “Fitch expects retailers to continue fighting volume declines in 2023, with inventory management and cost control key to protecting operating results."

NRF’s numbers were up 3% unadjusted year over year on a three-month moving average as of May. Sales were up 4.2% year over year for the first five months of the year.

May sales rose on a monthly basis in all categories except health/personal care stores and clothing/apparel stores, where they were unchanged from April. 

Sales were up in six out of nine retail categories on a yearly basis, led by health and personal care stores and online sales.

Specifics from key sectors are below.

•Health and personal care stores were unchanged month over month seasonally adjusted, but up 9.7% unadjusted year over year.

•Online and other non-store sales were up 0.3% month over month seasonally adjusted, and up 8.7% unadjusted year over year.

•Grocery and beverage stores were up 0.3% month over month seasonally adjusted and up 3.7% unadjusted year over year.

•Sporting goods stores were up 0.3% month over month seasonally adjusted, and up 2.5% unadjusted year over year.

•Building materials and garden supply stores were up 2.2% month over month seasonally adjusted, and up 1.9% unadjusted year over year.

•General merchandise stores were up 0.4% month over month seasonally adjusted, and up 1.7% unadjusted year over year.

•Clothing and clothing accessory stores were unchanged month over month seasonally adjusted, but down 0.2% unadjusted year over year.

•Electronics and appliance stores were up 0.2% month over month seasonally adjusted, but down 4.1% unadjusted year over year.

•Furniture and home furnishings stores were up 0.4% month over month seasonally adjusted, but down 4.5% unadjusted year over year.