The most recent U.S. Retail Sales Report shows that retail sales are down 1.3% from April. Sales were up 28.1% since this time last year. Total sales for March through May were up 36.2% year over year. Retail sales increased 0.9% in April.
- U.S. retail sales fell 1.3% month-over-month in May 2021.
- Sales were up year over year by 28.1%.
- Clothing and clothing accessory stores saw an increase of 3.0%.
Clothing and accessory stores saw a 3.0% increase from April, and sales were up 200.3% unadjusted year over year. Department store sales were up 1.6% from April. Sporting goods, hobbies, musical instruments, and book stores saw a decrease of 0.8% month over month.
Online and other non-store sales decreased by 0.8% last month and were up 7.9% unadjusted since May 2020. Health and personal care stores, such as drug stores, saw an increase of 1.8% from April and an increase of 25.6% year over year. Building and garden supply stores saw a month-over-month decrease of 5.9% and a 10.5% increase year over year.
Restaurant and bar sales saw a 1.8% increase from April, and sales are up 70.6% from this time last year. Food and beverage stores are up 1.0% from April and were up 0.7% unadjusted year over year.
Car and parts dealers saw an increase in sales of 34.8% year over year and a decrease of 3.7% month over month. Gas station sales were up 0.7% since April and were up 57.0% since May 2020.
The Retail Sales Report Can Predict Economic Growth
The U.S. Census Bureau report measures the U.S. retail industry each month by surveying about 5,500 employer firms to collect retail sales data. It shows the total sales and the percentage change for that month and also reports on the percentage change in year-over-year (YOY) sales for the last 12 months.
Retail sales signal trends in consumer spending, which drives almost 70% of economic growth. The retail industry alone supplies almost 52 million jobs. In addition to retail, personal consumption expenditures include services like housing and health care.
Since the retail sales report comes out monthly, it is a more current measurement of economic health than gross domestic product, which is reported quarterly. You can use the retail sales report to predict GDP before that news comes out. Keep in mind that the retail sales report doesn't adjust for inflation, while GDP does.
To predict GDP, look at year-over-year retail sales.
GDP is an annualized number. GDP growth compares this annualized figure to the prior year. Keep in mind that GDP growth uses real GDP figures and they eliminate the effects of inflation. The YOY retail sales reports use nominal GDP figures. GDP growth reports and YOY retail reports could have significant differences if inflation is very high or if there is deflation.
When using the retail sales report for forecasting, you should also look at other statistics. Most importantly, look at orders for durable goods—that's another great leading economic indicator.
Pay attention to forecasts for specific holiday sales. The National Retail Federation (NRF) surveys shoppers to find out how much they plan to spend on the major holidays. The report on Halloween spending provides early clues for the holiday shopping season. The NRF also reports on retail sales for Valentine's Day, Mother's Day, Father's Day, and Back to School.
About 20% of annual retail sales occur during the holiday season.
Retail Sales Outlook
According to the National Retail Federation (NRF), retail sales in 2020 grew 6.7% from 2019 to $4.06 trillion. Online sales accounted for $969.4 billion in retail sales.
The NRF's 2021 forecast predicts retail sales growing between 6.5% and 8.2% to more than $4.33 trillion. This reflects increasing vaccination rates and businesses reopening. Online sales are expected to grow between 18% and 23% to between $1.14 trillion and $1.19 trillion.