US retail sales backpedal as spending pivots to services; factory outputs surge 0.9%

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US retail sales backpedal as spending pivots to services; factory outputs surge 0.9%

On Tuesday, US Commerce Department data had unenveloped that US retail sales had soured more than anticipated in May as spending returned back to services from goods since an acceleration in vaccination push seemed to have encouraged pandemic-wary Americans to engage in outside activities which had been declining sharply due to pandemic-led restrictions.

Nonetheless, other economic data released earlier in the day had revealed that US manufacturing output rose 0.9 per cent in May amid a sharp uptick in domestic demands, while Producers price index jumped 0.8 per cent in latest sign of an upsurge in inflation.

However, although core retail sales retreated 0.7 per cent last month on a year-on-year basis, several analysts were quoted saying that the overall trend in retail sales remained strong with April retail sales data revised higher, well above a pre-pandemic level that kept hopes alive of a double-digit growth in consumer spending over the current quarter.

US retail sales fall off the wagon, but trend remains strong

According to US Commerce Department data revealed earlier on Tuesday, US retail sales were slumped by as much as 1.3 per cent in May, missing an analysts’ estimate of a decline of 0.8 per cent, while on an annualized basis, retail sales surged by 28.1 per cent, mostly supported by an increase in spending on goods.

Meanwhile, referring to a rotation in consumers’ spending towards goods from services, a Wells Fargo economist in Charlotte, North Carolina, Tim Quinlan said following release of the data, “The days of spending money online and splurging on durable goods and home furnishings is pivoting toward getting ready for trips to see grandma and grandpa at the lake or the beach and evenings out reconnecting with friends at bars and restaurants”.