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Retail Weakness Spurs Concerns

Retail sales in May were essentially unchanged on a seasonally adjusted basis after an upwardly revised gain of 0.6%, according to the National Retail Federation.

In May, sales were 5.3% above May a year ago on an unadjusted basis, and increased 4% on a three-month moving average year-over-year.

That might sound good, but NRF numbers exclude automobiles, gasoline stations and restaurants. The Commerce Department said overall retail sales dropped 0.3% in May, the first decline since February and the sharpest since a 1% decrease in January 2016.

“The lack of retail pricing power continues to be a benefit to consumers but an ongoing challenge for retailers,” said NRF chief economist Jack Kleinhenz. “While the month-to-month comparisons may be unimpressive, current trends in retail sales growth are healthy.”

NRF retail sales over the past three months are 4% higher than during the same three-month period last year, he noted. “The industry is off to a good start in the second quarter and prospects remain in line with our annual forecast for spending.”

NRF said May sales figures were generally similar across many retail segments. The electronics sector saw the biggest loss, down 2.8% from April.

On a year-over-year basis, building materials and furnishings saw the greatest growth (14.2%), closely followed by online and other non-store sales (12.4%), and furniture and furnishings (6.7%).

Clothing and accessories store sales rose 0.3% seasonally adjusted from April and increased 2.1% unadjusted year-over-year. General merchandise sales decreased 0.3% in May from April but increased 1.3% year-over-year, NRF reported.

Sporting goods sales dropped 0.6% from April, when seasonally adjusted, and decreased 2.9% year-over-year. Sales at health and personal care stores remained unchanged over April but increased 2.2% year-over-year.

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