Despite the challenges posed by persistent inflation and rising borrowing costs, Americans increased their spending at retailers in the month of May.
According to the latest U.S. Commerce Department report released on June 15, sales rose 0.3% rise from April to May, driven by stronger retail sales at auto and parts dealers, defying economists’ expectations. While retail sales have been volatile this year, experiencing a surge of nearly 3% in January followed by a decline in February and March, they rebounded in April.
These latest retail sales figures reflect a still-resilient economy, supported by a recent government report indicating a slight easing of consumer inflation. Prices only rose by 0.1% from April to May and increased by 4% over the previous 12 months, marking the lowest figure in more than two years.
The release of Thursday’s retail figures highlighted the potential impact of lower gas prices, which may have freed up consumers’ budgets, allowing them to spend on other items. Sales at car and auto parts dealers experienced a notable 1.4% increase in May while spending at online retailers and restaurants and bars saw respective gains of 0.3% and 0.4%.
Despite signs of weakness in other areas of the economy, Americans have demonstrated resilience in their spending habits. However, there are concerns on the horizon. Some discretionary sectors that had been stagnant for several months, including electronic stores and furniture stores, showed modest gains. However, sales remained unchanged at clothing retailers.
The solid job market has played a role in supporting consumer spending as well. The most recent report from the Labor Department on unemployment claims revealed that the number of Americans applying for benefits remained elevated. This could be an indication that the Federal Reserve’s rate hikes over the past year might be slowing down the job market.