Are retail sales increasing in the US?

Retail sales represent the purchase of goods and service through different channels by consumers and businesses. It indicates consumer demand for finished goods in a market.

The Bureau of the Census puts out the advance monthly sales estimate for retail and food services every month based on a survey conducted at approximately 5,500 retail and foodservice firms in the United States.

The data reports the total sales of durable and non-durable goods during a particular month and compares it with last year's and previous month's figures.

Importance of retail sales

Retail sales can give an exact idea of how the economy is doing. It indicates the buying capacity of consumers in the country.

Strong retail sales indicate the economy's expansion and growth in the gross domestic product as consumer spending accounts for two-thirds of GDP in the US.

Economists and investors always keep an eye on monthly retail sales to understand the economic trends and make future predictions.

Different categories

The Bureau of Census compiles the sales of retail and foodservice stores in 13 categories: Motor vehicle & parts dealers, general merchandise stores, clothing and clothing accessories stores, electronics and appliance stores, food and beverage stores, food services & drinking places, furniture and home furnishing stores, sporting goods, hobby, musical instrument and book stores, building material and garden equipment, supplies dealers, health and personal care stores, gasoline stations, nonstore retailers and miscellaneous store retailers.

Latest retail sales trend

The advance estimates of retail and food services sales in the US fell 1.3 percent from April. Consumer spending totaled US$620.21 billion in May, compared to US$628.68 billion in April.

Excluding motor vehicle and parts dealers, total retail declined 0.7 percent from the previous month.

Sales at auto and other vehicle dealers plunged 3.9 percent during the month as the automakers are grappling with chip shortage globally. Several automakers have been struggling to meet their production target amid the shortage of semiconductors.

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Some of the categories that saw a notable increase in spending include clothing and clothing accessories stores, restaurants, food and beverage stores, and health and personal care stores.

Sales at clothing and clothing accessories stores were up 3 percent, while food services and drinking places registered 1.8 percent growth. Food and beverage stores and health and personal care stores reported 1 percent and 1.8 percent growth in their sales, respectively.

Meanwhile, consumers reduced their spending at furniture and home furnishing stores, electronics and appliance stores, building material and garden equipment, supplies dealers.

Expenditure fell 2.1 percent at furniture and home furnishing stores, dropped 3.4 percent and 5.9 percent at electronics and appliance stores, and building material and garden equipment supply dealers, respectively.

Retail sales grew 0.9 percent in April, while they increased by 10.7 percent in March.

However, retail and foodservice sales jumped 28.1 percent compared to the spending figures in May 2020. Spending across all categories improved from the previous year's figure.

Also, the total retail sales in May remain higher than the amount registered in January and February 2020, before the coronavirus wreaked havoc.

US GDP grow in the first quarter

In May, the US posted a 6.4 percent growth in its gross domestic product in the first three months of the year, reflecting the increased consumer spending during the period.

The gradual economic recovery, reopening of business, and government assistance fuelled the GDP in the first quarter. Personal consumption expenditure surged 11.3 percent during the quarter.

The International Monetary Fund is forecasting the US economy to grow 6.4 percent in 2021. The GDP expanded 4.3 percent in the fourth quarter of 2020.

READ MORE: US GDP Grows By 6.4% In First Quarter As Economy Reopens

Inflation level

In May, the US recorded the highest leap in consumer prices after August 2008. According to the data from the Labour Department, the consumer price index, which key gauge for changes in commodity and services prices, jumped 5 percent in May.

However, excluding the volatile energy and food prices, the core price index grew by 3.8 percent during the month compared to May 2020.

Costs of used trucks and cars increased 7.3 percent from April while car rentals, prices of airfares, hotel rooms, furniture, and apparel were also up.

The consumer price index rose 4.2 percent in April.

READ MORE: US Consumer Prices Jump 5% in May, the Highest In 13 Years

What does the National Retail Federation Estimate?

National Retail Federation is the largest trade association. Recently, the NRF raised its 2021 annual retail forecast to increase in the range of 10.5 percent to 13.5 percent year over year.

The trade association expects retail sales to total between US$4.44 trillion and US$4.56 trillion in 2021. The forecast excludes sales at auto dealers, gas stations and restaurants.

Meanwhile, NRF anticipates 18 percent to 23 percent growth for online and other nonstore sales to the range of US$1.09 trillion and US$1.13 trillion.