The U.S. consumer appears to be more cautious than we would expect, with disappointing retail sales figures in May, according to the Census Bureau. Spending at retailers fell 0.3 percent in May, nearly reversing the 0.4 percent gain in April and well below consensus estimates. Americans had been more willing to open their pocketbooks, especially relative to the caution seen at the beginning of 2016. This culminated in 5.6 percent year-over-year growth in January, its fastest pace since March 2012, but the year-over-year rate has eased since then. Since May 2016, retail spending has increased 3.8 percent. To be fair, sales continue to rise modestly, and year-over-year growth has trended mostly higher, up from 2.3 percent at this point last year.
Looking at the May report, the data were mixed but mostly lower. Retail segments with the largest declines in monthly sales included electronics and appliance stores (down 2.8 percent), gasoline stations (down 2.4 percent), miscellaneous store retailers (down 1.3 percent), department stores (down 1.0 percent) and sporting goods and hobby stores (down 0.6 percent), among others. While nonstore retailers (up 0.8 percent), furniture and home furnishings stores (up 0.4 percent), clothing and accessory stores (up 0.3 percent) and food and beverage stores (up 0.1 percent) saw increases in May, each experienced reduced sales compared to April. It is worth noting the contrast between nonstore retailers and department stores in this report, as retailers continue to grapple with the structural shifts taking place between online and brick-and-mortar spending habits.