The retail sales in the month of May (seasonally adjusted) has been announced by the US Department of Commerce on the 15th, indicating a fall of 1.3% month-on-month, exceeding market expectations of 0.8%. As the new coronavirus vaccine progresses, travel and other activities that have been restricted by the pandemic have become possible, and in the recent trend, the consumption is shifting from goods to services. The previous month’s share was revised upward from the initial level to 0.9%.
“Economic activity seems to have slowed as the shift from goods consumption to service consumption seems to have slowed down,” said RubylaFalki, chief economist for the United States at the High-Frequency Economics. She clearly made it clear that “despite the slowdown, second-quarter sales are growing at a strong pace.”
In the United States, with the onset of the new coronavirus vaccination drive, the demand for travel, hotel accommodation, eating out, entertainment, etc., has been increasing, but the service industry category, which is included in the list of retail sales, is only restaurants and bars. The breakdown is that automobile sales decreased by 3.7%. The global shortage of semiconductors hindered the production of automobiles, which was affected by the tight supply of automobiles. All home appliances decreased by 3.4% too, and furniture decreased by 2.1%. Sports equipment and entertainment sector have also marked a declining ratio in its sales report.
The business sector of building materials has also decreased by 5.9%. Not only is that, the online retail sales down 0.8%. On the other hand, clothing increased by 3.0%, and eating out increased by 1.8%. The year-on-year rate of eating out raised by 70.6%. Other sectors like core retail sales, excluding automobiles, gasoline, construction materials, and eating out, fell 0.7% in May. In April, it was revised upward from the originally announced 1.5% decrease to a 0.4% decrease. Core sales are closely linked to the components of gross domestic product (GDP) personal consumption.
All private consumption, which accounts for more than two-thirds of the US economy approximately, increased 11.3% annually in the first quarter. Another strong growth is expected in the second quarter of the year as well, with most economists expecting double-digit GDP growth in the second quarter.“Personal consumption is expected to grow 10% annually in the second quarter due to a significant upward revision of April data,” said Michael Pearce, senior US economist at Capital Economics.