NRF: Retail Sales Rose in May Despite Economic Challenges

Retail sales rose again in May as consumers continued to spend despite economic challenges, the National Retail Federation (NRF) said last week.

NRF’s calculation of retail sales -- which is based on U.S. Census Bureau data but excludes automobile dealers, gasoline stations and restaurants to focus on core retail -- showed overall retail sales in May up 0.4 percent from April and up 4.4 percent year over year. In April, sales were up 0.6 percent month over month and up 1.4 percent year over year. NRF’s numbers were up three percent year over year on a three-month moving average as of May. Sales were up 4.2 percent year over year for the first five months of the year.

“This was a positive report with no sign of an abruptly-slowing economy despite what has happened with inflation and interest rate pressures,” said Jack Kleinhenz, chief economist, NRF, in a statement. “Even though shoppers dialed back in some categories on a year-over-year basis, these numbers confirm that consumers still have the capacity to spend."

May sales were up in six out of nine retail categories on a yearly basis, led by health and personal care stores, online sales and grocery and beverage stores, and up in all but two on a monthly basis, the NRF said. Clothing and clothing accessory stores were unchanged month over month, but down 0.2 percent year over year. Electronics and appliance stores were up 0.2 percent month over month but down 4.1 percent, and furniture and home furnishings stores were up 0.4 percent month over month but down 4.5 percent year over year.

Total Retail's Take: While the May retail numbers are certainly good news for retailers, it is probably best for retailers to be cautiously optimistic about the future. In his statement NRF's Kleinhenz said while job growth and wages are providing buoyancy, inflation continues to take a bite out of consumer income.

What's more, 71 percent of retailer respondents to a CNBC Supply Chain survey said they are concerned consumers will cut back on holiday spending in response to inflation. Two-thirds of respondents also said they expect consumers to be looking for discounts during peak retail season, and that more than half of orders will be promotional products, including free gifts with purchase.