Though retail sales rose for the 11th straight month in May, rising gas prices and a weak labor market took the steam out of consumer spending, with only a few retail sectors reporting growth over April.
Retailers are not surprised to see the momentum in consumer spending slowing, given the lackluster performance of employment and housing, said National Retail Federation (NRF) President and CEO Matthew Shay. Long-term economic growth will be reliant on Congress and the Administrations ability to support policies that promote private sector growth.
Retail sales at sporting goods, hobby, book and music stores reached $7.34 billion in May, down 0.4 percent from April and up 5.2 percent from May 2010, according to advance estimates released by the U.S. Census Bureau. That compared to a 0.1 percent increase of retail industry sales (which exclude automobiles, gas stations, and restaurants) over April and 5.0 percent unadjusted year-over-year increase, according to NRF calculations.
For the three months ended May 31, U.S. Census estimates sales at sporting goods, hobby, book and music stores were running 2.1 percent ahead of their level for the three months ended Feb. 28 and 5.9 percent ahead of their level for the three months ended may 32, 2010.
May retail sales by clothing and accessories stores, meanwhile, were off 0.2 percent from April, but up 6.0 percent from May 2010.
The estimates are adjusted for seasonal variation and for holiday and trading day differences, but not for price changes.
After a string of disappointing government reports relating to economic activity and employment, Mays retail report supports the idea of the economy hitting a soft patch, said NRF Chief Economist Jack Kleinhenz. Though consumers are spending cautiously, we are not seeing them cut out new purchases completely, signaling there is a distinct appetite to spend if economic conditions let them.
While retail has been a driving force of the recovery, the industry is not immune to factors like rising gas prices and weak housing, said Shay. We expect the pace of the recovery to pick up in time for the back-to-school season.
