Retail Sales Rebound More Softly Than Expected In May

Retail sales bounced in May from a poor April, but by less than expected, exacerbated by downward revisions to data in the two prior months.

• Overall retail sales grew by just 0.1% M/M, vs 0.3% expected, with April's outturn revised down to -0.2% (vs 0.0% prelim) and March's to 0.5% (from 0.6%). Ex-Auto/Gas sales disappointed to an even greater degree, rising by just 0.1% M/M, vs 0.4% expected (and April's likewise was revised down 0.2pp, to -0.3%, with March's to 0.6% from 0.7%)).
• Most notably there was a miss for the key Control Group (GDP input) category at +0.4% (vs +0.5% expected), exacerbated by downward revisions to the prior two months (-0.3% to -0.5% for April, +1.0% to +0.9% for March).
• Growth across the biggest retail sales categories of motor vehicles, non-store retailers was around 0.8% apiece, with food services/drinking places (-0.4%), food and beverage (-0.2%), building material (-0.8%) and general merchandise (+0.1%) flat-to-negative. See the chart below.
• As the revisions imply, these figures are volatile and subject to reassessment in the months ahead, but control group retail sales in May remained a little under the March level, with ex-auto/gas struggling to move above December 2023 levels.
• Overall retail sales in May were up 2.3% Y/Y, with the control group up 3.1%, compared to overall CPI up 3.3%.
• The softer-than-expected control group reading could marginally downwardly impact the pre-release view for the Q2 GDP reading, but overall it's stabilizing on a 3M/3M annualized rate basis (1.9% vs 1.2% in Apr, 1.3% Mar) at a very low level.