WASHINGTON - The value of retail sales rose by 0.8% in May overall and 0.9% excluding motor vehicle sales, well ahead of analysts' expectations due to widespread strength, data released by the Commerce Department Thursday showed.
Analysts have recently had a tendency to overestimate sales, so today's data deviates sharply from that trend. The miss was even worse when compared to the 0.3% gain markets had expected, so a week that started with strong inflation data and continued with a moderately hawkish FOMC statement has been made worse for those that would like to see a slowing of interest rate hikes.
Leading the gain in headline retail sales was a surprise gain in motor vehicles, which posted a 0.5% increase after a 0.2% gain in the previous month. Analysts had expected vehicle sales to be relatively soft based on industry data.
Gasoline station sales rose by 2.0% in the month after a 1.0% April gain, as foreshadowed by recent increases in the AAA data.
Food services and drinking places' sales were higher in May, registering a 1.3% increase after falling by 0.3% in April. Building materials sales rose by 2.4% following a 0.8% decrease in April.
Retail sales excluding autos, gasoline, and building materials rose by 0.6% in the month. Further, excluding food services as well as the other three measures, retail sales were up 0.5%.
Other sales categories were generally higher, with gains in every category except furniture and sporting goods, and a flat reading in food and beverage stores..
Incorporating an upward revision to April sales and today's data for May, second quarter retail sales to this point are up 5.3% at an annual rate from the first quarter average, a much better start than the weakness seen in the first quarter.
Sales excluding motor vehicles were up 5.2% from the previous quarter, while sales excluding autos, building materials, and gas were also up 5.2%. Even when food services were also excluded, second quarter sales were still up 5.2% at an annual rate from the first quarter, pointing to underlying strength outside the volatile categories.
