US retail sales surge 17.7% in May as shops reopen

Marco Green
June 17, 2020

U.S. retail sales roared back from record losses last month as states eased coronavirus lockdowns and stores reopened, new data show.

The monthly report, due to be released by the Commerce Department on Tuesday (June 16), is expected to show overall receipts at U.S. retailers jumped 8 per cent last month, according to a Reuters poll of economists. Even with the improvement, the value of all retail sales remained 6.1% below last year's level."As states began to reopen their economies, households reopened their wallets,"said Andrew Grantham, economist at CIBC".

Why it matters: The result - the biggest monthly jump in consumer spending ever - is a big upside surprise, much better than the 8% jump that economists expected. The report also suggests that elevated unemployment benefits and other payments from the USA government are working to boost demand.

Despite the promising data, experts have warned that the United States faces a long climb back from the worst economic downturn since the Great Depression. In May, businesses added 2.5 million jobs and the unemployment rates declined from the record-high hit in April.

The surge in retail sales came in the same month that the USA added a record 2.5 million jobs, thanks in part to the lifting of restrictions aimed at controlling the deadly virus.

The closely watched "retail control" figure, which further backs out building materials and food services in addition to excluding gas and automotive-related sales and most closely tracks the consumer spending component of gross domestic product, is expected to have risen 4.7 per cent, according to the Reuters poll. Clothing and accessories stores reported the biggest percentage gain at 188% while sporting goods, hobby, musical instruments and book stores rose 88.2%. Sales at electronics and appliances stores rose 50.5 percent. Sales at restaurant and bars rose 29 percent.

Consumer spending, which typically drives 70 percent of the nation's economy, has dropped sharply in recent months.

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