U.S. Retail Sales Increased in May

Sales rose 0.5% last month, a boost to the economy this spring
The Wall Street Journal 14 June 2019 Sarah Chaney

WASHINGTON—American shoppers ramped up their spending in May, a boost to the economy this spring.

Retail sales, a measure of purchases at stores, restaurants and online, increased a seasonally adjusted 0.5% in May from a month earlier, the Commerce Department said Friday. April sales were revised to a 0.3% increase from a 0.2% decline, and retail sales excluding the volatile categories of autos and gas rose 0.5% last month, underscoring solid spending momentum.

Consumer spending is the main driver of the U.S. economy, accounting for more than two-thirds of economic output.

Strong retail-sales growth shows the economy is overall on solid footing despite trade tensions and slowing global growth. Other facets of the economy are also offering signs of resilience. The services sector, which accounts for 88% of U.S. gross domestic product, keeps expanding and unemployment is historically low.

Michelle Gass, chief executive at Kohl’s Corp., sees a healthy consumer.

“All the indications continue to be really strong in terms of unemployment, customer confidence,” Ms. Gass said in an earnings call last month.

Inflation remains tame, a dilemma for the Federal Reserve, but a positive development for Americans looking to shop.

Even as conditions remain supportive of household spending, headwinds persist. Job creation, which cooled in May, may continue to slow in the coming months as employers struggle to fill open roles. That could ultimately impede spending and broader economic growth.

Retailers could feel the squeeze from tariffs in coming months.The Trump administration slapped 25% tariffs on more than $40 billion of goods that are imported from China last month, affecting clothing, luggage, handbags and furniture, among other consumer products. In response, merchants may have to decide whether to absorb the added costs of the new tariffs themselves, spread them across their vendors or pass them on to consumers.

Friday’s report showed the rise in May spending across the economy was fairly broad-based, with gains posted in discretionary categories. Spending picked up at electronics stores, restaurants and sporting-goods shops, according to the Commerce Department report. Online retail sales grew 1.4%.

Gasoline-station sales rose 0.3% in May from the prior month.