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First Cut: May retail and food sales makes second quarter consumer spending look firmer

Retail and food sales in May were up 0.5% from April, and April was revised higher to up 0.3% (previously down 0.2%). While the May headline was a bit below expectations, the nice upward revision to April helped make up for it. The first two months of the second quarter are on a firmer footing for consumers spending than previously thought.

Retail and food sales excluding motor vehicles were also up 0.5% in May with April revised to up 0.5% (previously up 0.1%).

Sales at auto dealers were up a solid 0.8% in May as unit sales rebounded after a soft level in April. Building materials managed to eke out an increase of 0.1%. Gasoline sales were up 0.3% in spite of lower prices at the pump.

“Core” retail sales — sales excluding motor vehicles, building materials, and gasoline — were also up 0.5 in May from April. Sales were 1.1% higher for electronics and appliances, perhaps reflecting the influence of a revived housing market, although sales of furniture were up only 0.1%. Sales were up 1.1% for sporting goods and up 0.7% for general merchandise, although department store sales were down 0.7%. Clothing store sales were flat.  Nonstore retailers — which includes online buying — were up 1.4%.

In spite of a few softer categories, overall retail sales were generally good in May. Sales were up 3.2% year-over-year in May, both at the headline and excluding motor vehicles. The “core” was up 3.6% year-over-year.  Retail activity has recovered some of the momentum lost in the second half of 2018 and seems to be settling at a more moderate — but still respectable — pace.

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