Retail sales totaled $501.97 billion in May, a 0.8% increase over the prior month, according to the U.S. Census Bureau. The performance bested last May by 5.9%.
The increase marks the largest gain in the last six months. It also beat economists’ estimates of a 0.4% improvement, according to Reuters.
The increase bodes well for the second quarter, especially given that the government revised its April 2018 sales data from a 0.2% to 0.4% gain.
“U.S. households are back to their free spending ways, with the strength of May’s retail sales figures implying that second-quarter real consumption growth (and GDP growth for that matter) will now be more than 4 percent annualized,” Paul Ashworth, chief U.S. economist at Capital Economic, told MarketWatch.
Ashworth, added his voice to the chorus, which includes the National Retail Federation, by crediting the strong job market and tax cuts for boosting spending.
“The economy is looking strong and households have a solid financial foundation on which to base their spending,” NRF chief economist Jack Kleinhenz said. “We have seen ongoing momentum over the last several months and believe sales growth should remain healthy and consistent with our 2018 outlook.”
Kleinhenz warned though that inflation and higher oil prices as well as the threat of new tariffs could dampen consumer spending going forward.
Clothing and accessories stores increased 1.3% over the previous month and 5.9% year on year. Department store sales increased 1.5% over last month’s total and 2.1% over May 2017.
Non-store sales, which are primarily comprised of online transactions, inched up 0.1% to $55.8 billion in May—or 9.1% above the performance for this category during the prior-year period.
Building, home and garden retailers led the surge with a 2.4% bump in sales over April and 5.2% over the prior May. Higher prices at the tank continued the upward trajectory for gas sales. The category saw a 2 percent increase over the prior month and a 17.7% leap from the prior-year period.
On the other end of the spectrum, home furnishing sales declined by 2.4% from month to month, though that still represented a 3.5% increase over May 2017. The sporting goods category also saw a sales decline. May 2018 fell 1.1% short of the previous month and 0.7% below last May.