Economic Watch: Retail Sales Increase for Fourth Straight Month
June 12, 2014
Retail sales in the U.S. increased for the fourth consecutive month during May increasing 0.3% from the month before and 4.3% from the level the same time a year earlier.
A new U.S. Commerce Department reports the gain follows a 0.5% increase in April and a 1.5% jump in March, the biggest climb in four years.
Leading the May hike was a 1.4% increase in auto sales from the month before, which were 11.1% greater than in May 2013. Excluding sales of autos, retail sales increased just 0.1% in May from April. About only half of the major retail categories reported increases in May from the month before, meaning the increase for the month was not broad.
Despite the positive report, it was below the expectations of many economists, due partly to April’s level being revised upward from an earlier report.
“Aside from autos and gasoline, consumers weren't doing much spending in May,” said Lindsey Piegza, chief economist at the investment firm Sterne Agee. “Forecasts for 4% gross domestic product [increase] predicated on a resurgence in consumption, thanks to pent-up demand carrying forward from the start of the year, appear to be slowly loosing favor as the consumer continues to loose momentum.”
She pointed out that consumers weren't simply sitting at home at the start of the year, most were busy spending on other services. “The average household was spending on health care services and an extra $600 to $1,000 more on utilities to heat the family home. In other words while we expect consumption to remain positive, any rise in goods consumption will likely be offset by a decline in service spending.”