US retail sales post biggest drop in 16 months – Business Insider


A shopper passes a window display at the Beverly Center mall in Los Angeles, California November 8, 2013.  REUTERS/David McNew
A
shopper passes a window display at the Beverly Center mall in Los
Angeles

Thomson
Reuters


WASHINGTON, June 14 (Reuters) – U.S. retail sales recorded their
biggest drop in more than a year in May amid declining purchases
of motor vehicles and discretionary spending, which could temper
expectations for a sharp acceleration in economic growth in the
second quarter.

The Commerce Department said on Wednesday retail sales fell 0.3
percent last month after an unrevised 0.4 percent increase in
April. May’s decline was the largest since January 2016 and
confounded economists’ expectation for a 0.1 percent gain.

Retail sales rose 3.8 percent in May on a year-on-year basis.
Some of the drop in monthly retail sales reflected lower gasoline
prices, which weighed on receipts at service stations.

Excluding automobiles, gasoline, building materials and food
services, retail sales were unchanged last month after an
upwardly revised 0.6 percent rise in April.

These so-called core retail sales correspond most closely with
the consumer spending component of gross domestic product and
were previously reported to have increased 0.2 percent in April.

Growth is expected to pick up this quarter after being held back
by a near stall in consumer spending and a slower pace of
inventory investment at the start of the year.

The economy grew at a 1.2 percent annualized rate in the first
quarter after notching a 2.1 percent pace in the October-December
period.

The Atlanta Fed is forecasting the economy growing at a 3.0
percent annualized rate in the second quarter, but this estimate
could be trimmed following the weak core retail sales.

May’s surprise sluggishness in consumer spending, which accounts
for more than two-thirds of the U.S. economy, could worry Federal
Reserve officials who have previously attributed the slowdown in
domestic demand to transitory factors.

Still, the U.S. central bank is expected to raise interest rates
by 25 basis points later on Wednesday, the second increase this
year. Further rate hikes are likely to depend on the outlook for
inflation and economic growth.

Auto sales fell 0.2 percent after rising 0.5 percent in April.
Receipts at service stations dropped 2.4 percent, the largest
decline since February 2016. Sales at building material stores
were unchanged, while receipts at clothing stores rose 0.3
percent.

Department store sales tumbled 1.0 percent, the largest drop
since July 2016. Department store sales are being undercut by
online retailers, led by Amazon.com . That has led some
retailers, including Macy’s , Sears and Abercrombie & Fitch
to announce shop closures.

Sales at online retailers increased 0.8 percent last month after
rising 0.9 percent in April. Sales at electronics and appliance
stores plunged 2.8 percent, the largest drop since March 2010.

Receipts at restaurants and bars dipped 0.1 percent, while sales
at sporting goods and hobby stores fell 0.6 percent.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Read the original article on Reuters. Copyright 2017. Follow Reuters on Twitter.

US retail sales post biggest drop in 16 months – Business Insider

Leave a Reply

Your email address will not be published.