May retail sales data from Commerce and NRF turn in promising performances

Retail sales for the month of May both saw increases to varying degrees, according to data issued today by the United States Department of Commerce and the National Retail Federation.

Commerce reported that May retail sales at $455.6 billion rose 0.5 percent over April. April was up 1.3 percent over March, which represents the largest gain going back to March 2015. On an annual basis, May saw a 2.5 percent increase. Total retail sales from March through May were up 2.4 percent compared to the same period last year.

The NRF reported that retail sales saw a 3.2 percent annual increase in May, and excluding automobiles, gasoline stations and restaurants, seasonally-adjusted retail sales in May were up 0.2 percent unadjusted compared to April, with retail sales up 0.5 percent in May over all.

“May’s retail sales show a solid reading, reinforcing that consumer spending continues to be a bright spot in the economy,” NRF Chief Economist Jack Kleinhenz observed in a blog posting. “Improvement in the labor market — which has seen additional jobs and rising wages — has no doubt influenced retail sales and shows that households are feeling better about spending and the economy.”

Earlier this year, the NRF said it is calling for 2016 retail industry sales, excluding automobiles, gas stations, and restaurants, to see a 3.1 percent annual increase.

While this estimate comes in higher than the 10-year average of 2.7 percent, it falls short of the NRF’s 2015 estimate of 4.1 percent. The Washington, D.C.-based organization also said it expects non-store sales to grow between 6-9 percent in
2016.

The NRF offered up some other metrics that it maintains point to a strong 2016 on the retail sales front, including:
-2016 economic growth to be in the 1.9 percent-to-2.4 percent range; and
-an estimated 190,000 new jobs added per month, which is off from 2015 but consistent with a growing labor market

Even though retail sales activity saw gains in May, that has not been fully reflected in the freight transportation and logistics sectors, which remain hampered by low demand and declining volumes to a large degree, as has been the case in previous months.

IHS Global Insight Director of Consumer Economics Chris Christopher was upbeat on May’s retail results.

“In April, consumers came out swinging after a lackluster first-quarter and as the stock market made a return,” he wrote in a research note. “May’s retail sales report confirms that the American consumer is back on track despite rising pump prices and a poor showing of jobs added to the economy in May. First-quarter real consumer spending growth came in at a 1.9% annual rate. As a result of this report, we are upping our outlook for second quarter real consumer spending growth from 3.4% to 3.5%. The outlook for consumer spending is looking significantly stronger for the remaining three quarters of the year premised on real disposable income gains, low interest rates and oil prices, and strong finances.”