Announced this morning, Retail Sales decreased -0.9% in May, a larger decrease than expected and considerably less the revised figure from the previous month. The Control Group, which is a closer measure of the inputs for GDP that excludes sales for food, autos, building materials, and gas stations, increased 0.4% in May, higher than expected rebounding from the previous month’s measure.
Reviewing the various categories, monthly sales for Miscellaneous Store Retailers, up 2.9%, Furniture Stores, up 1.2%, and Non-store Retailers, up 0.9%, were relatively strong while monthly sales at Motor Vehicle & Parts Dealers, down -3.5%, and Gasoline Stations, down -2.0%, were relatively weak.
Overall, headline retail sales fell in May more than expected and were well below last month’s level. Sales for automobiles and gasoline helped drive the decrease. Conversely, the control group increased more than expected considering those categories are not included in the calculation. Consumers appear reserved as spending levels were mixed across the various categories and as they evaluate the ongoing tariff negotiations. Recent geopolitical events may only add to the uncertainty. How the Federal Reserve interprets the mixed picture for the consumer, elevated geopolitical tensions, and a steady but moderating labor market will be key factors for the economy in the coming weeks.
In all, the 10-year US treasury yield has been lower this morning but ticks up following the report and equity futures are lower as we head into the market open.
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