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By the Numbers

Featuring brief segments of economic analysis from our senior economist Michael Bazdarich, PhD.

The economic analysis we previously featured in By the Numbers is now available on the Western Asset Blog. This page will no longer be updated.

May Retail Sales Show Some Life

Retail sales rose nicely in May, along with some upward revisions to previous months’ data. So, today’s news marks the first upbeat report on retail activity following five months of thud. Total sales were up 1.2% in May, while the “control” measure we track was up 0.6%, along with +0.4% of revisions to the growth rates for March and April.

The accompanying chart tells the story well. The month-ago version of this chart showed “control” sales hugging their trend line of the last four years, having fallen back to trend after a mini-surge late last year. The May change and revisions announced today show sales levels lifting somewhat above that trend. It is not a sales explosion, but, again, it is the first sign of above-trend growth in a while.

Given the favorable tone to the overall sales data, the details were a bit odd. That is, restaurant sales, which had been the one bright spot of the data over recent months, slowed their growth in May. Similarly, sales at electronics stores, department stores, and grocery stores continued to be sluggish. The overall sales strength was driven by strong gains at furniture, leisure, clothing, and building materials stores, along with car dealers.

Our outlook has been for continued trend-like growth in retail sales. With disposable incomes growing steadily at a rate of only 3.4%, we haven’t seen the potential for retail sales growth to jump above its trend path of 3.2% growth. Today’s news is a strike against our outlook, but, again, the first such strike in five months. We’ll see whether it is sustained in the months to come.

Retail Sales Trends
Retail Sales Trends Chart
Source: Census Bureau. As of 31 May 15. “Control” retail sales is total sales less vehicle dealers, service stations and building material stores

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 44 years of experience to his position. "By the Numbers" will address economic data releases that are pertinent to a broad range of investors.

Prior to joining the Firm in 2005, Mike ran his own consulting firm, MB Economics. He earned his PhD in Economics at the University of Chicago.

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