The consumer showed a lot of life in May, driving up retail sales 1.2 percent with gains sweeping nearly all components. A leading component in the month was motor vehicle sales which jumped 2.0 percent, excluding which retail sales still rose a very strong 1.0 percent. Another component showing special strength was gasoline sales which got a boost from higher prices. Still, excluding both of these components, retail sales ex-auto ex-gas gained a very solid 0.7 percent. These results offset weakness in April, when total sales rose only 0.2 percent (upward revised from no change).
In contrast to weakness through most of the April report, there's only one component showing contraction in May and that's the usually solid health & personal care stores at minus 0.3 percent. Standouts on the plus side, apart from vehicles and gasoline, are building materials & garden equipment stores, up 2.1 percent, clothing & accessories stores, up 1.5 percent, and nonstore retailers, up 1.4 percent. Department stores, which sank a steep 2.9 percent in April, rebounded with a 0.8 percent gain.
The long awaited rebound from the soft first quarter is finally here. Today's results will have forecasters upping their estimates for second-quarter GDP. These results will also be a key point of discussion, especially in arguments by the hawks, at next week's FOMC meeting.
Recent History Of This Indicator
Retail sales have been very disappointing with the report in April sending forecasters back to downgrade their second-quarter GDP estimates. But the May report looks to get a major lift from what was a surge in vehicle sales during the month. Total sales are expected to rise 1.3 percent but with less strength in the ex-auto reading, at plus 0.8 percent. The core ex-auto ex-gas reading, coming off a small gain in April, is seen climbing a respectable 0.5 percent.