U.S. retail sales in May missed expectations as consumer spending slowed amid soaring inflation and rising interest rates.
Retail and food services fell 0.3% month over month in May, according to U.S. Census Bureau data released June 15. Economists expected a 0.1% increase, according to consensus estimates compiled by Econoday.
Sales were down across many categories including electronics and appliances, motor vehicles and auto parts, and health and personal care.
"It's clear that month over month, retail spend has been retracting due to people curbing their overall spending in response to inflation and rising interest rates," said Chip West, a retail and consumer behavior expert at marketing solutions company Vericast. The extra money consumers are spending on gas is also cutting into discretionary spending options, he said.
Retail sales
U.S. retail and food services sales decreased to an advance estimate of $672.87 billion in May from a revised $674.67 billion in April, according to seasonally adjusted Census Bureau data. Year over year, retail and food services sales rose 8.1% in May.
Sales at gas stations were up 4% in May from April, and 43.2% year over year. Sales at motor vehicle and parts dealers were down 3.5% month over month, electronics and appliances sales were down 1.3% month over month, and furniture and home furnishing stores were down 0.9% month over month.
Consumers have grown increasingly concerned about inflation since the fall of 2021, and price rises may not moderate until the beginning of 2023, said Marwan Forzley, CEO of global payments platform Veem.
"Consumer sentiment is beginning to take a hit as everyday Americans feel the pinch of high prices and are reevaluating their spending habits," Forzley said. "If this continues, businesses could be affected by depressed consumer spending and dampen economic forecasts for months ahead."
Default signals
Computer and electronics had the highest median market signal one-year probability of default at 11.8% as of June 13, according to S&P Global Market Intelligence data. The scores, which represent the odds of default within a year, are based primarily on the volatility of share prices for public companies in the sector and account for country- and industry-related risks.
The median probability of default score for all publicly traded retailers as of June 13 was 4.3%.
Bankruptcies
There have been four retail bankruptcy filings in 2022 as of June 14, according to Market Intelligence. This is the lowest number of filings for the same period in at least 12 years. Cosmetics company Revlon Inc. filed for bankruptcy June 15.
