Retail, Restaurant Sales Show Signs Of Recovery In May After Record Jump
What Happened: The Advance Monthly Retail Trade and Food Services Survey for May that was released Tuesday showed a 17.7% month-over-month increase.
The numbers are 6.1% lower year-over-year. Total sales are down 10.5% overall from March through May on a year-over-year basis.
These numbers come from a stratified random sampling of 5,500 firms nationwide that are then used to represent national level data.
The increase in retail sales was the biggest in records dating back to 1992, according to The Wall Street Journal.
Why It’s Important: The Dow jumped more than 500 points Tuesday following the release. In contrast to recent months, there is reason for optimism as states move to reopen.
A downturn in spending was expected due to the coronavirus pandemic.
Projections for spending between March and May were revised downward Tuesday from 16.4% to 14.7%.
Notably, big-ticket purchases such as appliances and new cars are down. Building and garden material purchases are up 16.4% compared to this time last year. Restaurants and bars saw a 29% increase in spending from April, but are still down 39% from the same time in 2019.
What's Next: Government action and individual choice. It’s still too early to tell how much of this economic spending is a direct result of increased unemployment benefits and stimulus provided by the CARES Act.
As states push to reopen, will people share the same optimism?
Even before businesses were shut down by state or local governments, individuals were less likely to go out, as shown by decreased foot traffic and measures such as restaurant reservations.
With summer upon us, expect to see continued lower spending as individuals cancel their summer trips. With new vehicle, travel and appliance spending down, a ripple effect in the car and gas industries could be on the horizon, too.
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