Retail sales decline in May as consumers shift to services spending

US retail sales declined in May after a boost in previous months as consumers are spending more on services with reopening of the economy.

Retail purchases plunged by 1.3 per cent in May in comparison to 0.9 per cent gain in April, according to data by the Commerce Department.

The decline in retail sales shows that with reopening of the economy people have started spending on travel as well as entertainment which has led to slowdown in spending on goods.

With unemployment benefits expiring and stimulus checks being spent, the pace of consumer spending is expected to go down.

Out of 13 major retail categories, eight reported decline in sales receipts last month.

Retail sales, excluding vehicle sales decreased 0.7 per cent whereas motor vehicle and parts dealer sales fell 3.7 per cent in May. Furniture stores, electronics outlets and building materials merchants also showed the same trend.

Sales at restaurants increased by 1.8 per cent highlighting the shift towards services spending as people get back to normal life.

Clothing stores sales also increased by 3 per cent in May as many offices reopen and social activities start again.

So-called control group sales, which exclude more volatile categories including food services, car dealers, and gasoline stations, decreased 0.7 per cent in the month.

(With inputs from Bloomberg)

Picture Credits: Bloomberg