Retail sales spike in May surge
Public confidence still low, however, despite buying spree
Retail and food services sales in the U.S. rose 18 percent in May, surging as regional economies began to reopen, according to fresh figures from the U.S. Department of Commerce.
Despite the steep rise from the prior month, May sales were still down 6 percent year over year, and sales for the March through May period were down about 11 percent from the same period in 2019. While the upward trend from April to May signaled some recovery, economists said, consumer confidence remains low and the economy is not yet on the rebound.
Excluding drops in sales of motor vehicles, motor vehicle parts and gasoline, the year-over-year decline was less, analysts noted. Retail trade sales were up 17 percent from April, but 1.4 percent below last year’s level. The sector saw increases in online and nonstore retail — up 31 percent from May 2019 — and in building and garden supply sales, which were up 16 percent from last year.
“Compared to last year, May’s retail sales were lower by only 1.4 percent, an astonishing feat considering most of the non-essential retailers were still shut for a good part of May,” Moody’s Vice President
Mickey Chadha said in a statement.
Patrick Jankowski, senior vice president for research at the Greater Houston Partnership, cautioned against overestimating the significance of the retail uptick. He said the surge likely stemmed more from pent-up demand over March and April than a rise in spending power.
“I don’t want to discount the jump, but when you don’t sell anything for two months, on the third month you’re going to see a huge bump in sales,” he said, noting June activity will be a better indicator of consumer confidence.
Jankowski pointed to yearover-year decreases in motor vehicle sales, which are down
around 3.9 percent, and gasoline station sales, which are down 31 percent. Gas pump sales drive job growth in the greater Houston area, he said, and so those numbers still need to come up.
He also pointed to persisting declines in sales of clothing and furniture, which were down 63 percent and 22 percent respectively
from 2019 levels.
Spending in those areas is discretionary, Jankowski said, and will likely remain low until job employment picks back up.
Indeed, the last month saw several companies that rely on consumers’ discretionary spending file for bankruptcy or announce plans to liquitate assets, including national chains such as 24 Hour Fitness, Stage Stores, J.C. Penney, Men’s Warehouse and Luby’s, among others.
Once that sector of the retail market grows, Jankowski said, the economy can start to truly rebound.
“It’s nice to see this,” Jankowski said of retail increases, “but by no means does it signal that the worst is over.”
The 16 percent drop in April, at the height of coronavirus closures, was a history-making plunge.