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United States: Retail sales contract at sharpest pace since March 2023 in May
Latest reading: Retail sales dropped 0.9% month-on-month in seasonally adjusted terms in May (April: -0.1% mom), a larger fall than markets were expecting. The figure marked the worst reading since March 2023, and was due to contractions across a range of subsectors.
On an annual basis, retail sales rose at a more moderate pace of 3.3% in May (April: +5.0% yoy), the worst result since October 2024. Meanwhile, annual average growth of retail sales was 3.5% in May, mirroring April’s result.
Panelist insight: Commenting on recent developments, TD Economics’ Ksenia Bushmeneva said:
“A flurry of activity in anticipation of tariffs boosted consumer spending earlier this year, but that momentum is now looking to have run its course, with retail sales declining in both April and May. Car sales came back to earth in May, following outsized gains in the prior two months as consumers rushed to replace their vehicles ahead of the tariffs. The same is also true for purchases of building materials, electronics and appliances. Consumers have shown more caution recently, with saving rate moving higher in April – potentially signalling rising precautionary savings.”
