Rebate Checks Boost May Retail Sales

Retail industry sales for May (which exclude automobiles, gas stations, and restaurants) rose 3.8 percent unadjusted over last year and 0.9 percent seasonally adjusted month-to-month, according to National Retail Federation.

May retail sales released today by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 1 percent seasonally adjusted from the previous month and increased 3 percent unadjusted year-over-year.

“Thanks to the tax rebate checks consumers received last month, the economy got a nice shot in the arm,” said NRF Chief Economist Rosalind Wells. “It’s evident consumers are feeling a bit more confident about their expenditures, especially with both April and May sales seeing positive increases in many sectors.”

Most shoppers hit discounters and grocery stores in May, stocking up on necessity items, NRF said. Sales at grocery stores increased 0.6 percent seasonally adjusted from April and 8.5 percent unadjusted year-over-year. General merchandise stores sales increased 1.2 percent seasonally adjusted month-to-month and 7.4 percent unadjusted from last year.

Some consumers did splurge. Sales at electronic and appliance stores increased 0.7 percent seasonally adjusted month-to-month and a solid 4.4 percent unadjusted year-over-year. Clothing and clothing accessory stores sales increased 0.5 percent seasonally adjusted from April and 2.4 percent unadjusted from last May.

Sporting goods, book and hobby merchandise also benefitted, with sales last month increasing 0.7 percent seasonally adjusted month-to-month and 4.4 percent unadjusted year-over-year.

Health and personal care stores sales were also a bright spot, with sales increasing 0.8 percent seasonally adjusted from last month and 4.9 percent unadjusted year-over-year.

Nigel Gault, chief U.S. economist, with Global Insight, said that he thinks the Fed figures for the past three months suggests that the economic improvement may be more widespread than originally thought.

“Not only was the May improvement better than expected, sales for both March and April were revised up very sharply,” Gault said. “If we combine the May news with the historical revisions, overall real consumer spending for the second quarter is now tracking at around 2 percent real growth, rather than the 0.7 percent rate that we expected previously.”

He continued, “It is impossible to know just how much of the sales improvement in May was due to the $50 billion in stimulus payments that had been distributed by the end of the month. But the fact that March and April now look much more robust than before suggests that stimulus was not the only factor at work.”