Not quite there yet?
How equity bulls will read the latest retail sales report is anyone’s guess. Spending advanced across six of 13 major spending categories, led by increases at auto dealers and gasoline stations. The cost of gas was a mere penny higher at $3.65 during May than it was in April. Retail sales rose once more to a record $437.6 billion, spurred by employment gains. The headline advance of 0.3% was about half the projected pace, while stripping out the heavyweight car and gas components left sales unchanged on the prior month.
However, the April reading was revised substantially higher to a gain of 0.5% (from +0.1%) meaning that the May advance was off a higher base. Sales of building materials advanced strongly, rising by 1.1%. And so stripping out the major pieces of the report, leaves the GDP measure also standing still following an advance of 0.2% in May. With consumer spending accounting for 70% of the overall economy, today’s report hardly hints at a runaway quarter. Sales of consumer electronics, healthcare products, food, clothing and sporting goods all suffered declines last month. General merchandise goods fell by 0.6% with department store sales as a group feeling a decline of 1.4% following a 1.9% April-time advance.
Chart – Consumer spending at a record – again