Retail sales pretty mixed

Core retail sales in May were a bit softer than expected. They rose .4% m/o/m, one tenth less than anticipated and off a lower than estimated base as April was revised lower by 2 tenths to a drop of .5%. They are up 3.1% y/o/y which compares with the 5 year average leading into Covid of 3.6%. As overall inflation is rising by a similar amount, there is not really any REAL consumer spending growth if we include spending on services too. That said, most of this calculation of retail sales from the government is on goods and we know goods price inflation has fallen to around zero. The 2.2% fall in spending on gasoline didn’t help much to lift other areas of retail sales.

Spending was mixed. Sales for autos/parts rose .8% m/o/m but after falling over the two prior months. Building materials, suffering from the 30 yr low in the pace of existing home transactions, saw an .8% m/o/m sales drop and are down 4% y/o/y. Sales of furniture fell 1.1% m/o/m and lower by 5.9% y/o/y. La-Z-Boy confirmed that last night. Sales of electronics rose .4% and up by 3% y/o/y. Clothing sales as we enter the summer saw sales rise .9% m/o/m and up by 4.5% y/o/y. After two months of declines, sales of sporting goods rebounded by 2.8% but lower by 1.9% y/o/y. Sales at department stores were flat and little changed y/o/y, up .7%. Online retailing saw an .8% m/o/m increase and up 6.4% y/o/y. Business at restaurants and bars seem to be now flat lining over the past 6 months, hints we got from a lot of restaurant earnings, falling by .4% after rising by a like amount last month. They are still up 5% y/o/y.