Retail sales slide 0.3 percent, biggest drop in 16 months

  • Retail sales slide 0.3 percent, biggest drop in 16 months

Retail sales slide 0.3 percent, biggest drop in 16 months

United States retail sales recorded their biggest drop in more than a year in May amid declining purchases of cars and discretionary spending.

US retail sales fell in May by the most since the start of 2016, reflecting broad declines in categories including motor vehicles and electronics, Commerce Department figures showed Wednesday.

Americans also reduced vehicle purchases, with sales at automobile dealers down 0.2 percent after a 0.5 percent increase in April.

Electronics and appliance store sales fell sharply by 2.8% on the month and there was a further decline in general merchandise store sales.

Make it your business. Economists had been expecting a 0.3% gain. That's the weakest monthly report for retail sales in more than a year and a half.

However, while flat month-to-month sales appear to be gloomy, that narrow snapshot is deceptive, according to GlobalData Retail Managing Director Neil Saunders.

The economy grew at a 1.2% annualised rate in the first quarter after notching a 2.1% pace in the three months from October to December.

May's surprise sluggishness in consumer spending, which accounts for more than two-thirds of the USA economy, could worry Federal Reserve officials who have previously attributed the slowdown in domestic demand to transitory factors. Investors reacted by buying traditionally safe assets such as government bonds and high-dividend companies while selling stocks from other industries that depend more on economic growth.

Furniture store sales rose 0.4% in May and clothing and accessories sales rose 0.3%. But the other reports from the government, which included muted retail sales and price increases, suggest that shoppers remain spendthrifts despite a more robust job market. But consumers also cut spending at big-box stores, electronics retailers and restaurants.

In addition, sales at food and beverage stores increased by 0.1% from April and 2.4% from May the year prior.

Sales at department stores were actually lower last month than they were in May 2016, reflecting the erosion caused by internet rivals.