US retail sales show healthy clothing spend in May
Clothing was the bright light in what appeared to be a gloomy month for US retail sales in May as retailers posted the biggest decline in sales in 16 months.
New figures from the US Census Bureau show total retail sales were down 0.3% in May on the month prior, the biggest drop since January 2016.
The reversal in May unwound much of the strength in April, when sales were up 0.4% thanks to a late Easter holiday and the arrival of tax refunds for US workers. Sales at non-store retailers, or e-commerce, jumped 10.2% year-on-year.
Sales at clothing and accessories retailers in May were up 2.1% to US$21.94bn from $21.49bn year-on-year, an improvement on sales growth of 0.3% April.
Department stores posted negative growth, with sales down 3.1% on the prior year. Store closures, lower customer traffic, weaker conversion rates over the month, and higher discounting all contributed to the poor outcome.
Neil Saunders, managing director of GlobalData Retail, says that while the retail sales figures appear gloomy, they paint a partial and misleading picture.
On an unadjusted basis, total sales were up by 5.2% year-over-year – the highest rate of growth since January. Such an increase, he says, is aligned with the rise in consumer sentiment and the more robust numbers coming out of other areas of the economy.
However, he warns: "Despite the solid sales numbers and better sentiment numbers, it is worth noting that consumers remain cautious.
"As such, the level of growth posted this month is unlikely to be sustained over the remainder of summer. This applies in particular if interest rates continue to rise. To date, the impact of rate increases has been small – but from our tracker, more consumers are now becoming concerned about the impact of higher interest payments on their various debts.
"While our forecast for 2017 remains solid, we maintain our view that growth will be patchy and not benefit all retailers. The pattern of winners and losers is set to continue."