–Ex Autos -1.1%, ExAuto/Gas -0.8%; Autos -1.7%,BldgMat -9.3%,Gas -3.3%
By Joseph Plocek
WASHINGTON (MNI) – The U.S. May retail sales report was weak,
suggesting Q2 growth will slow. However, much of the slowing was due to
severe seasonal adjustment in spring fix-up categories, and this calls
into question whether there is broad-based caution in spending.
May retail sales printed -1.2%, ex auto printed -1.1%, and ex auto
and gas printed -0.8%, all far worse than the small gains expected. The
drop was the worst showing since September 2009’s -2.2% sales, posted
when the economy was ending a recession.
April sales were revised higher, but not by enough to offset the
most recent drops. In Q2, average sales so far are below the March
level, implying lower consumption.
In May, unadjusted sales rose, but not by enough to overcome severe
seasonal adjustment factors. Building materials in particular were
damped by adjustments, depressed by more than $5.5 billion. The slow
housing recovery could be restraining the normal seasonal desire to
repair homes.
May’s sales decline was centered in -9.3% for building materials
(the biggest decline since the series began more than 18 years ago), but
also included -3.3% for gasoline, -1.3% for clothing, and -1.7%
for autos. Since unit new auto sales were strong, it is possible parts
and used autos were the weaker areas.
There were some gains in May: furniture at +1%, electronics at
+0.6%, food at +0.3%, healthcare at +0.3%, and sporting goods at +0.4%
all performed well. This mix included discretionary items, suggesting
the consumer is still spending selectively.
Bottom line: not a good showing and consumers will have a hard time
recovering enough in June to push Q2 growth higher. Rising incomes and
recovering financial markets might not be enough to push consumption to
robust gains that lead the economy.
**Market News International Washington Bureau: (202)371-2121**
[TOPICS: MAUDS$,M$U$$$,MT$$$$,MAUDR$]
