Retail Sales drop in May
KPMG Senior Economist Ken Kim offers three key takeaways.
U.S. retail sales declined 1.3% m/m in May coming in slightly below market expectations. Despite the weaker headline print, a number of categories experienced increases, particularly those associated with return to the office and going out.
Retail Sales declined by 1.3% in May, coming in slightly below market Expectations. Despite the weaker headline print, a number of categories experienced increases, particularly those associated with return to the office and going out. For example, sales at restaurants and bars, closing store sales, and sales at health and personal care stores were all up in May. So, what are the three key takeaways: First, over the coming months we expect to see a transition away from goods consumption towards services consumption as consumers, while vaccinated consumers re-engage with the economy via travel and going out. Second, the shift away from goods consumption should help ease price pressures for goods that the economy has been experiencing as of late. Third, retail sales account for about 15% of GDP while services consumption accounts for about 50% of GDP. As this shift occurs we see a more durable economic recovery in the quarters ahead.