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Drop in retail sales signals uneven consumer spending

Drop in retail sales signals uneven consumer spending

The Commerce Department said Wednesday that retail sales dropped 0.3 percent, the first decline since February and the sharpest since a 1 percent decrease in January 2016.

Retail sales fell 0.3% m/m in May according to the advance Census Bureau report.

The bureau estimates that May retail sales slipped 0.3% from April 2017 to $417.7 billion but were up 4% from the month past year. Sales at nonstore retailers increased 0.8% from April, while increasing 10.2% year-over-year. But not really. Inflation was actually negative last month, so in real terms the decline was only 0.1 percent.

The May report was a weak one; however, the softness was made up by the size of the upward revision to sales in March and April. Non-store retailers also indicated consistent gains of 0.8 percent. The category is up 12.4% year-on-year and continues to take market share from traditional bricks and mortar retailers.

Economists said that they expected consumer spending to pick up in spring and summer.

But the Fed is still expected to raise interest rates by 25 basis points later tonight, the second increase this year. Americans cut spending at department stores, gas stations, and electronics shops in May. They declined 1% in May, the worst performance in almost a year.

Closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, were unchanged in May after climbing by 0.6% in April.

Receipts at restaurants and bars dipped 0.1%, while sales at sporting goods and hobby stores fell 0.6%.

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