Following April, which posted the lowest annual monthly retail sales decline going back to February 1981, May retail sales showed some improvements but remained down, according to data issued today by the United States Department of Commerce and the National Retail Federation (NRF).
Commerce reported that total May retail sales adjusted for seasonal variation and holiday and trading-day differences—at $485.5 billion—posted a 17.7% sequential gain over April, while falling 6.1% annually. This follows April retail sales—at $403.9 billion—which fell 16.4% sequentially, and 21.6% annually, following March’s $483.5 billion tally, which marked an 8.3% annual decline. As previously reported, that two-month stretch marked the largest decline for two consecutive months on record, with each month setting new records for lowest monthly sales.
Total U.S. retail sales from March through May were off 10.5% annually.
Commerce said that retail trade sales headed up 16.8% from May to April and were down 1.4% annually in May. Non-store retail sales, which are largely comprised of e-commerce, shot up 30.8%, as consumers continue to heavily lean on e-commerce during the COVID-19 pandemic. And garden equipment and supplies dealers rose 16.4% annually.
The NRF reported that sales headed up in May, due to myriad retailers and other businesses, which had been closed, due to COVID-19, started reopening, while remaining below spending levels from a year ago.
“The economy kicked off in May as retailers and other businesses reopened and both stimulus money and supplemental unemployment checks fueled spending driven by pent-up demand from two months of shutdowns,” NRF Chief Economist Jack Kleinhenz said in a statement. “But full recovery is still a long way off. Comparisons against April have to be taken in context because April was a full month when almost everything that wasn’t deemed ‘essential’ was shut down. Spending has improved considerably but it’s still far below where it was a year ago, and while the freefall in consumer confidence is over, unemployment remains high and confidence is still at recession levels.”
Going forward, Kleinhenz said that wallets are primed and that increased foot traffic shows that consumers are returning to stores, and retailers are ready to meet their demand.
“But we are likely to remain on a roller coaster for a while,” Kleinhenz said. “What we need to look at is the trajectory of employment and the direction of the virus. There’s hope for a turnaround in the economy in the third quarter but if the virus has a reawakening, we’re going to see some serious situations for consumers.”
NRF highlighted retail May retail numbers for various sectors, including:
“The disruption caused by the pandemic has done strange things to our perception of numbers,” wrote Neil Saunders, Managing Director of GlobalData Retail, in a research note. “Usually, a 7.7% year-over-year decline in retail sales would be an unmitigated disaster – but in the context of everything that is going on, the outcome is palatable. The good news is that May’s dip is far less sharp that April’s precipitous drop of 19.5% a sign, in our view, that the worst is now over for retail and that the sector is on the road to recovery. There should be no doubt, however, that the road to normality is a long one.”