BofA’s omniscient analysts warning ahead of this morning’s retail sales data from the US is simple: Brace!
And after the small 0.1% MoM rise the prior month was revised to a 0.1% MoM decline, BofA was right again with Retail Sales tumbling 0.9% MoM in May – the biggest drop since March 2023…
Source: Bloomberg
The big driver of downside was a drop in Gasoline Station sales – which makes some sense as gas prices have tumbled – and an even bigger drop in Auto Sales (as the tariff front running surge evaporates)…
The tariff front-running hangover hits…
Source: Bloomberg
Ex Autos and Gas, sales fell 0.1% MoM (worse than the +0.3% expected) and Ex-Autos sales dropped 0.3% MoM (worse than the +0.2% MoM expected).
So an ugly set of data reflecting sentiment’s slump?
As a reminder, this data is nominal, so adjusting (very roughly) for inflation, retail sales rose 0.9% YoY, back to its lowest since Oct 2024… but still positive…
While the seasonally-adjusted sales print was down, unadjusted sales were higher in May (as they have been seasonally for years)…
However, there is a silver lining as the Control Group – which feeds directly into GDP – rose 0.4% MoM (better than expected) and considerably stringer than the upwardly revised 0.1% MoM decline in April…
So, the bad news is Americans seem to be spending less… but top-down GDP will be positively impacted in Q2.
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