US retail sales grew in May upending economists' expectations that consumer spending would falter.
Retail and food service sales rose 0.3% month over month in May, following a 0.4% gain in April, according to US Census Bureau data released June 15. Economists expected May sales to fall by 0.1%, according to data compiled by Econoday. The sales gain came amid tighter credit conditions for consumers as the Federal Reserve has raised benchmark interest rates to the highest level since 2007 in an attempt to tackle continuously high inflation.
"This was a positive report with no sign of an abruptly slowing economy despite what has happened with inflation and interest rate pressures," National Retail Federation Chief Economist Jack Kleinhenz said in a June 15 note.
Meanwhile, two companies filed for bankruptcy protection from mid-May through June 14, and the median default risk for retailers receded, according to S&P Global Market Intelligence data.
Retail sales
The advance estimate for US retail and food services sales totaled $686.57 billion in May, up from a revised $684.21 billion in April, according to Census Bureau data. On an annual basis, May sales rose 1.6%.
Among retail categories, the 2.2% gain at dealers of building material, garden equipment and supplies was the largest monthly increase. Motor vehicle and parts dealers registered the second-largest gain among major categories, with sales rising 1.4% over April.
On an annual basis, food services and drinking places registered an 8.0% gain and health and personal care stores registered a 7.8% rise, the largest increases.
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Gasoline stations, meanwhile, registered the largest monthly decline at 2.6% and the largest annual drop decline at 20.5%.
Bankruptcies
Shoe retailer The Rockport Co. LLC and watch seller Retailing Enterprises LLC were the two retail bankruptcy filings in the past 30 days through June 14. Both companies offer their products online.
As of June 14, 15 retailers filed for bankruptcy, five times the total of the first five months of 2022 and the same as the comparable period of 2021. Broadly, corporate bankruptcies are rising from a slowdown over the past two years.
Default risk
Median default risk across retail categories dipped to 2.8% as of June 13 from 3.0% on May 16, according to Market Intelligence's Market Signal Probability of Default model. Default risk dropped across most retail categories, except for home furnishing, apparel and specialty retailers, which each registered a slight uptick.
Scores produced by the model represent the odds of default within a year and are based primarily on the volatility of share prices for public companies in the sector, accounting for country- and industry-related risks.