Summary
- US retail sales rose 0.9%% in May from a month earlier, topping the market consensus of 0.6%%.
- A 3.4%% rise in gas station sales and a 1.2%% rebound in auto sales helped lift 11 of 13 categories, underscoring the strength of domestic demand.
- Lower-income households may have less capacity to keep spending because of high borrowing costs, falling inflation-adjusted wages, and a declining savings rate.
US retail sales rise 0.9% in May
Auto sales rebound
11 of 13 categories post gains
Card spending continues to increase
Lower-income households face borrowing pressure
US retail sales rose more than expected in May, indicating consumer demand held up despite higher fuel prices. The figures suggest the domestic economy remains resilient even as inflation and borrowing costs stay elevated.
Bloomberg reported on June 17 that the US Census Bureau said retail sales in May increased 0.9% from the previous month. That was 0.3 percentage point above the market consensus of 0.6%. April's increase was revised to 0.4%. The figure is nominal and does not reflect price changes.
Economists highlighted that Americans increased spending last month even as gasoline prices climbed. In May, prices at the pump rose amid the impact of the Iran war, sending average gasoline prices to their highest level in nearly four years. Even so, spending increased across a relatively broad range of categories rather than being concentrated in a few items.
Gas station sales rose 3.4%, helping drive the overall increase in retail sales. Retail sales excluding gas stations also rose 0.7%, indicating spending remained solid even after stripping out the effect of energy prices. Sales increased in 11 of 13 categories. Auto sales rebounded 1.2%, the biggest gain in nearly a year.
Companies are also seeing firm demand. Large retailers including Target and Walmart have said shoppers are spending more steadily than expected despite years of elevated prices. The latest data are being interpreted as a sign that US household spending is not easily weakening even in a high-inflation environment.
Card spending data showed a similar pattern. Data from Bank of America, JPMorgan Chase and PNC Financial Services Group indicated spending continued to rise last month. Larger-than-usual tax refunds and gains in the stock market appear to have supported consumers' ability to spend.
So-called control-group retail sales, which feed into GDP calculations, rose 0.7%. The measure excludes food services, auto dealers, building material stores and gas stations, and is used to gauge underlying consumer demand.
Still, some services spending showed signs of weakness. Spending at restaurants and bars, the only service category included in the retail sales report, fell 0.1% in May after a strong increase in April. That suggests some discretionary spending, including dining out, remains under pressure even as goods consumption improves.
The recovery in spending also does not appear to be evenly shared across income groups. Card data suggest higher-income households are increasing spending at a faster pace, while lower-income households face tight budgets and high borrowing costs. Inflation-adjusted wages have fallen, and the savings rate has also declined. That suggests consumers may have less room to keep spending.
Hwang Jung-soo, Hankyung.com reporter [email protected]
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