Retail sales fell in May for the first time this year and mortgage applications rebounded after the prior week’s decades-low, reports showed Wednesday.
Here’s a quick look at the most significant economic indicators of the day and what they tell us.
- Retail and food service sales fell in May for the first time this year, as inflation and weaker confidence caught up with the average consumer’s spending habits, according to the Census Bureau. Sales—which aren’t adjusted to remove the impact of inflation—dropped to $672.87 billion, as consumers cut back, especially on large purchases such as cars, electronics, and appliances.
- Spending at restaurants and bars increased by 0.7%, however. Economists said consumers are continuing a shift from retail to more spending on services, where prices aren’t rising quite as fast.
- Since overall sales had been expected to increase slightly, the 0.3% dip from April’s numbers could indicate that Americans are growing wary in the face of economic pressures such as inflation and the sagging stock market, economists said.
- Applications for purchasing and refinancing a home bounced back last week, growing for the first time in five weeks, according to the Mortgage Bankers Association (MBA). A weekly index measuring the volume of mortgage applications for home purchases and refinancing increased 6.6%, nearly regaining all the ground it lost after falling to the lowest point in 22 years the week before.
- The average 30-year fixed mortgage rate jumped to 5.65%, the highest level recorded by the MBA in nearly 14 years. Despite the increase, the refinancing index grew by 4% and the purchase index increased by 8%.
- Homebuilder confidence in the single-family housing market continued to erode in June, dropping to its lowest level since the summer of 2020, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index. The index fell two points to 67, dipping for the sixth consecutive month.
- Homebuilders are feeling pressure from the rising cost of construction materials and dwindling interest in buying new homes as mortgage rates climb.
- Businesses are struggling to thread the needle between supply chain woes and shifting consumer spending, according to the Census Bureau’s latest figures on business inventories. Inventories grew 1.2% in April, a slowdown after March’s 2.4% spike.
- Consumers can see the impact of fluctuating business inventories in stores. For example, Target recently suggested that, because of overstocking, it had discounted an excess of unsold goods and even canceled orders from some vendors.
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