Retail sales rise again in May

#Retailsales rise more than expected amid further labor market softening ? Retail sales rose above expectations in May, pointing to another sign of spending resilience that might push the long-awaited recession further down the road. ?? While the Federal Reserve's new projections on Wednesday implied a later date for an economic downturn in early 2024, we will need to see more strength from both spending and the labor market to update our call. ?? In a separate report from the Labor Department, more labor market softening happened as initial claims came in hot at 262,000, the highest since November 2021 and above market forecasts. That was the second week in a row that new claims were above 260,000, pointing to more persistent increases in layoffs. ?? The mixed signals from the spending and labor channels make it harder to pinpoint the timing of the next recession if it is indeed going to take place. Thus, there are clear risks both to the upside and downside to our recession prediction for the second half of the year. ?? On the upside, excess savings, a resilient labor market, and summer spending on services—which are not covered by the retail sales data—might keep spending intact. ?? But on the downside, there is no guarantee that those savings will be spent as consumers might pull back harder from spending while expecting more economic slowdown to come. On a 3-month moving average, sales of all items declined in May, down 0.06%, while the control group saw only a 0.04% month-over-month increase. In a sense, the sales number exceeding expectations may not be as strong as the overall figure implies. The robust 1.4% month-over-month increase in auto sales is also a concern for the future, considering that sales of new vehicles tend to be volatile.

Every month when the U.S. Dept of Commerce releases its #retailsales report, Retail Dive crunches the numbers for the segments we cover. These include #ecommerce, #departmentstores sales, #specialty retail and other core segments that are most useful to our readers. In May, retail sales rose a respectable 4.2% year over year, though discretionary spending was sapped somewhat as consumers prioritized dining out. Memorial Day sales helped, as did the easing of inflation. More here

It was a skip! The Federal Reserve is truly data dependent, focusing on trends in the labor market, housing, consumer spending and inflation. The data have remained robust: home sales and prices turning higher with consumers still spending. This morning’s Census retail sales coming in strong, even for durable goods, confirming the healthy spending trends we are seeing in our Mastercard SpendingPulse data. More discussion here with Alix Steel and Guy Johnson ahead of the Fed - thanks to Bloomberg for having me in the studio! #economy #consumer https://lnkd.in/e5wJqzya

It certainly seems that the investment community continues to ignore the Fed. Bonds are rallying today - why? If you don't want to believe that the Fed has another two FFR increases in 2023 (5.6% target), at least believe the data. Advance Monthly Sales for Retail & Food Services increased by 0.3% in May when -0.2% was the forecast. This increase comes after April's 0.4% increase. Since consumption accounts for nearly 70% of the GDP, it is difficult to imagine a recession on the horizon given full employment. Furthermore, it certainly doesn't seem that the US consumer is being constrained by the interest rate increases to date. But why should they be? US treasury yields on maturities 5 years and longer are up only marginally during the last year. #bonds #assetallocation #interestrates #cashflowmatching #pensions #powell #federalreserve #retailsales

Comparing multiple time frames is one of the easiest ways to spot a real trend. Some interesting Month vs. YTD trends showing up in the Advanced Retail Sales report today: Sector : May vs YA : Jan-May vs YA Grocery: 3.1% : 4.4% Gas Stations: -20.5%: -10.1% Gen Merch (i.e. Walmart, Costco): 2.0% : 3.9% Nonstore Retailers (i.e. eComm): 6.5% : 7.4% Food services: 8.0% : 12.9% Three key takeaways here: 1. The slowdown in Grocery, Gen Merch, and Nonstore is partly driven by slowing inflation. However, the rates of growth are still way below inflation in general, meaning more negative volume across the board. This will catch up to profitability for public companies (it already has, but it will take more shape next quarter) 2. Out of Home food inflation is growing, but we can see the YOY trend for total sales is declining. Major implication here as services has been a leader in job growth. This tells me consumers are pulling back out of home (and we've already seen they're pulling back in-home as well). 3. If you wonder what pricing can do to this report, and by "what" I mean bias a perspective, look at gas stations. The five month average for gas stations is -10.1% but this month alone it's -20.5%! Did 1/5 of miles driven move to electric? No. Point of bringing this up is because this is how pricing influences all other goods...and it's why this report tends to make positive headlines while there's chaos under the surface. Regardless, we're always fortunate to have this report available. #retail #retailsales #consumerbehavior

There was a barrage of economic data on Thursday morning.?In sorting through it, a picture emerges of uneven economic activity that nonetheless points to: 1.?????Reasons to be sanguine about the outlook for inflation. The Import Price Index declined 0.6% month-over-month in May and is down 5.9% year-over-year. Much of this was due to a 6.4% month-over-month fall in fuel import prices (priced in US dollars) and plunge of 35.2% year-over-year. Nonfuel imports dipped 0.1% month-over-month in May and were down 1.6% year-over-year. ?Costs for imported items have fallen, a relief for manufacturing and services and also a reflection of easing in delays along the supply chain. 2.?????Reasons to hope that despite dismal levels of confidence indexes, consumers are still spending and on big ticket items. Retail and food services spending surprised to the upside with a 0.3% increase in May and held on to the 0.4% rise in April. This points to a modest but healthy level of spending in the first two months of the second quarter 2023. Moreover, the May reading would have been higher had it not been for the decline of 2.6% in the dollar value of sales at service stations. The pace of consumer spending may be easing, but spending continues. 3.?????Reasons to expect that the labor market is not deteriorating significantly. The 262,000 new claims in the June 10 week were unchanged from the prior week. The June 3 and 10 readings are higher than the preceding weeks and the highest since 265,000 in the November 13, 2021 week. But these remain consistent with a healthy labor market, just one not as tight as it has been. 4.?????Reasons to think that manufacturing is eking out mildly positive activity. The report on industrial production for May showed a 0.2% decline overall, but that was due to decreases in the more volatile mining and utilities sectors. Manufacturing managed a 0.1% month-over-month gain in May driven by a 0.2% rise in motor vehicle manufacturing. Growth may not be much, but it is nonetheless growth. 5.?????Reasons to think that June could be a turning point for the factory sector. Although the New York and Philadelphia Fed surveys of manufacturing told wildly different stories about current conditions, their respective indexes for future business conditions showed decisive improvement that may mean a pickup in activity soon and a recession averted. The upshot is that by the time the July 25-26 FOMC meeting rolls around, monetary policymakers could have enough evidence to extend the pause in rate hikes for a second meeting in a row. It would, however, be far too soon to proclaim that the fight against inflation was over. Please do not use without attribution. Copyright ? Theresa A Sheehan

2023 CPG customer journey, food & beverage insights. This year consumers of Consumer Packaged Goods will have more avenues to discover and buy daily necessities, ranging from search platforms and influencers to TikTok, Instagram, Amazon, and even small-scale family-owned stores. Similarly, marketers are presented with an unprecedented number of possible touchpoints to utilize in steering these purchasesBrilliant report by the folks at Tinuiti based on a survey with more than 3,000 US adults. ??Food and Beverage Searches are Most Likely to Start on Walmart ??Out of the 80% of consumers who browse for prepackaged food and drink items online, Walmart is the top preferred starting point, with Amazon trailing considerably behind as the second choice. Although Amazon is a heavy hitter in numerous categories, its portion of the online grocery market differs from its stature in other product segments. ??Kroger, the most expansive grocery-specific chain nationally in the US, ranked third in terms of the website or app where people would typically initiate their food and drink product search, with Target coming in a close fourth. Less than 4% of participants chose to start their searches for food and drink items via conventional search engines such as Google or Bing, displaying a clear preference for directly visiting sites that sell these products instead of seeking out relevant results through a search engine. ??Facebook Still Dominates Social Product Discovery, but TikTok is Making Inroads ??Social media plays a massive role in surfacing food and beverage products. When surveying various media channels, television emerged as the leading platform where respondents had noticed a food or beverage item they subsequently bought within the past year, capturing 36% of the responses. Social media channels took the second spot, being the source where 30% of participants initially came across a food or drink product they later purchased. ??Physical Grocery Stores Still Dominate Food and Beverage Purchases ??Regarding where consumers buy food and drink products, three-quarters of the participants reported shopping at grocery stores in the past month, while 57% patronized large retail stores such as Walmart and Target. The third most frequented platform for making purchases was online through major retailers like Amazon or Walmart, as 32% of respondents indicated. ??Among the online outlets, Walmart emerged as the predominant website/app where consumers are most likely to buy food and drink items. With a 37% response rate, it outperformed the second-placed competitor, Amazon, by more than double and was over five times ahead of the biggest grocery store, Kroger. It's worth noting that 20% of respondents do not purchase food or beverage items online. Follow #ecommert to track insights about #ecommerce #sales #growth.