June 25, 2019 – “Looking past softer retail sales headline growth reveals strength in consumer spending in May,” said Visa’s Chief Economist, Wayne Best. “This retail sales report also suggests spending on durable goods should rebound in May, helping to support overall personal spending.” Retail sales growth slowed further to 3.2 percent year-over-year (YoY) in May, although month-over-month (MoM) retail sales growth accelerated from April’s reading. The acceleration in May suggests greater momentum behind spending in Q2.
Other highlights of this report:
- Strong retail sales ex-automobiles growth last year masked improvements in the retail spending situation in May. Last year’s bump in spending was largely due to effects from tax cuts, which are beginning to unwind a year later.
- The U.S. economy added just 75,000 jobs in May and the unemployment rate remained unchanged at 3.6 percent. Average hourly earnings decelerated slightly but remain up over 3 percent YoY. While there were very few jobs added in May, only two major sectors lost jobs for the month, implying the slower pace of job growth has more to do with a tight labor market rather than a deterioration of economic conditions.
- The Consumer Confidence Index climbed higher in May to 134.1, from 129.2 in April. Consumers’ assessment of both current and future economic conditions improved. One concerning aspect of the report was that consumer confidence fell for those below the age of 35 to the lowest reading since September 2016.