In what may well be further evidence to support the view that the US economy is already cooling, retail sales for May missed estimates by a fairly large margin, data out Tuesday showed.
Sales fell 1.3% last month (figure below), considerably worse than the 0.8% consensus expected. The range was -3.5% to 1% from more than six-dozen economists.
The fresh read on consumption appeared to be a dubious encore to April’s downside surprise, but an upward revision (from unchanged to a 0.9% gain) helped cushion the blow.
That said, the ex-autos print was woefully out of step with estimates, falling 0.7% against expectations for a 0.4% gain. Similarly, the control group posted a 0.7% decline, although April was revised to just a 0.4% drop from the initially reported 1.5% slump.
Meanwhile, PPI rose 0.8% last month, well above the 0.5% estimate. The range was 0.3% to 1%. Recall that producer prices rose twice as much as expected in April.
The YoY PPI print for May was 6.6%, hotter than forecast and the most in data going back to November of 2010 (figure below).
“Nearly 60% of the May increase in the index for final demand can be traced to a 1.5% rise in prices for final demand goods,” the government noted. The index for final demand services rose 0.6%.
The largest gains were in food and energy, which is good news, because people don’t generally need either of those things.
The core print was 0.7%, unchanged from April (figure below). The 5.3% YoY jump in core was the most since August of 2014, when data were first calculated.
You can dig as far into these figures as you like, but what I’d note is that it wouldn’t be terribly difficult to put a negative spin on the situation.
On retail sales, the revisions are an unequivocally positive development (and total sales are miles above pre-pandemic levels) but at least when it comes to media coverage, you’re unlikely to find too many outlets willing to run with that narrative. Instead, folks will focus on May’s downside “surprise.”
When juxtaposed with yet more evidence of price pressures, you’re left with a somewhat depressing conjuncture, and that’s what “sells” — or doesn’t sell, depending on how much you’re charging and whether workers take seriously the notion that wages are likely to increase.
Ultimately, though, the data isn’t likely to matter ahead of the Fed, precisely because nobody expects the Fed to be swayed by it.
