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May Retail Sales Remain Solid

June 14, 2016

by Doug Short

The Census Bureau's Advance Retail Sales Report released this morning shows that the seasonally adjusted sales series increased in May. Headline sales came in at 0.5% month-over-month (0.45% to two decimal places), which was above the 0.3% increase forecast by Investing.com. Headline sales are up 2.5% year-over-year. Core Retail Sales (ex Autos) came in at 0.4% MoM (0.44% to two decimals), matching the Investing.com forecast.

Here is the introduction from today's report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for May, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $455.6 billion, an increase of 0.5 percent (±0.5%)* from the previous month, and 2.5 percent (±0.7%) above May 2015. Total sales for the March 2016 through May 2016 period were up 2.4 percent (±0.5%) from the same period a year ago. The March 2016 to April 2016 percent change was unrevised at up 1.3 percent (±0.2%).

Retail trade sales were up 0.4 percent (±0.5%)* from April 2016, and up 2.0 percent (±0.5%) from last year. Nonstore retailers were up 12.2 percent (±1.2%) from May 2015, while Health and Personal Care Stores were up 8.3 percent (±2.1%) from last year. [view full report]

The chart below is a log-scale snapshot of retail sales since the early 1990s. The two exponential regressions through the data help us to evaluate the long-term trend of this key economic indicator.

Retail Sales Trends

The year-over-year percent change provides another perspective on the historical trend. Here is the headline series.

Retail Sales YoY

Here is the year-over-year version of Core Retail Sales.

Core Retail Sales YoY


Retail Sales: "Control" Purchases

The next two charts illustrate retail sales "Control" purchases, which is an even more "Core" view of retail sales. This series excludes Motor Vehicles & Parts, Gasoline, Building Materials as well as Food Services & Drinking Places. The popular financial press typically ignores this series, but it a more consistent and reliable reading of the economy.

Control Sales Trends

Here is the same series year-over-year. Note that the current level is fractionally below the highlighted values at the start of the two recessions since the inception of this series in the early 1990s.

Control Sales YoY

For a better sense of the reduced volatility of the "Control" series, here is a YoY overlay with the headline retail sales.

Headline and Control YoY

Bottom Line: The May sales were a solid follow-up on the major sales advance in April. The May 0.45% month-over-month gain is a better the 0.37% monthly average since the end of the last recession. When the latest Consumer Price Index is released later this week, we'll take a close look at Real Retail Sales.