U.S. retail sales post
biggest drop in 16 months
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[June 14, 2017]
WASHINGTON,
June 14 (Reuters) - U.S. retail sales recorded their biggest drop in
more than a year in May amid declining purchases of motor vehicles and
discretionary spending, which could temper expectations for a sharp
acceleration in economic growth in the second quarter.
The Commerce Department said on Wednesday retail sales fell 0.3 percent
last month after an unrevised 0.4 percent increase in April. May's
decline was the largest since January 2016 and confounded economists'
expectation for a 0.1 percent gain.
Retail sales rose 3.8 percent in May on a year-on-year basis. Some of
the drop in monthly retail sales reflected lower gasoline prices, which
weighed on receipts at service stations.
Excluding automobiles, gasoline, building materials and food services,
retail sales were unchanged last month after an upwardly revised 0.6
percent rise in April.
These so-called core retail sales correspond most closely with the
consumer spending component of gross domestic product and were
previously reported to have increased 0.2 percent in April.
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Growth is expected to pick up this quarter after being held back by a
near stall in consumer spending and a slower pace of inventory
investment at the start of the year.
The economy grew at a 1.2 percent annualized rate in the first quarter
after notching a 2.1 percent pace in the October-December period.
The Atlanta Fed is forecasting the economy growing at a 3.0 percent
annualized rate in the second quarter, but this estimate could be
trimmed following the weak core retail sales.
May's surprise sluggishness in consumer spending, which accounts for
more than two-thirds of the U.S. economy, could worry Federal Reserve
officials who have previously attributed the slowdown in domestic demand
to transitory factors.
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![](../images/061417pics/busine45.jpg)
A shopper passes a window display at the Beverly Center mall in Los
Angeles, California November 8, 2013. REUTERS/David McNew
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Still,
the U.S. central bank is expected to raise interest rates by 25 basis points
later on Wednesday, the second increase this year. Further rate hikes are likely
to depend on the outlook for inflation and economic growth.
Auto sales fell 0.2 percent after rising 0.5 percent in April. Receipts at
service stations dropped 2.4 percent, the largest decline since February 2016.
Sales at building material stores were unchanged, while receipts at clothing
stores rose 0.3 percent.
Department store sales tumbled 1.0 percent, the largest drop since July 2016.
Department store sales are being undercut by online retailers, led by Amazon.com
<AMZN.O>. That has led some retailers, including Macy's <M.N>, Sears <SHLD.O>
and Abercrombie & Fitch <ANF.N> to announce shop closures.
Sales at online retailers increased 0.8 percent last month after rising 0.9
percent in April. Sales at electronics and appliance stores plunged 2.8 percent,
the largest drop since March 2010.
Receipts at restaurants and bars dipped 0.1 percent, while sales at sporting
goods and hobby stores fell 0.6 percent.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
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