Retail sales saw a record increase in May as retailers and other businesses closed by the Coronavirus pandemic began to reopen but remained well below spending levels seen during the same period a year ago, the National Retail Federation (NRF) said on Tuesday.
“Today’s sales report is very encouraging news at a time when we need to focus on what will happen as retail doors open once again,” said Matthew Shay, president and CEO of NRF, during a live interview on CNBC’s “Squawk Box” program this morning. “For a sick economy, there is no better medicine than retailers responding to consumers who are ready to safely return to stores. These sales numbers do not reflect the same strength we had going into the pandemic, but they certainly reflect the trajectory we need coming out of it. The most important thing now is to keep these retail stores open for business and not penalize them by closing their doors in the event of a coronavirus surge. As those stores that remained open – our economic first responders – have shown, retailers have developed solutions that protect the safety of their customers and associates, and they are sharing those lessons to the benefit of store owners large and small in communities across the country.”
“The economy kicked off in May as retailers and other businesses reopened and both stimulus money and supplemental unemployment checks fueled spending driven by pent-up demand from two months of shutdowns,” added Jack Kleinhenz, chief economist at NRF. “But full recovery is still a long way off. Comparisons against April have to be taken in context because April was a full month when almost everything that wasn’t deemed ‘essential’ was shut down. Spending has improved considerably but it’s still far below where it was a year ago, and while the freefall in consumer confidence is over, unemployment remains high and confidence is still at recession levels.”
“Going forward, wallets are primed, increased foot traffic shows that consumers are returning to stores, and retailers are ready to meet their demand, but we are likely to remain on a roller coaster for a while,” Kleinhenz said. “What we need to look at is the trajectory of employment and the direction of the virus. There’s hope for a turnaround in the economy in the third quarter but if the virus has a reawakening, we’re going to see some serious situations for consumers.”
The U.S. Census Bureau said today that overall retail sales during May were up 17.7 percent seasonally adjusted from April but down 6.1 percent year-over-year. That follows a record-setting 14.7 percent month-over-month drop in April.
Kleinhenz cautioned that the reliability of May’s numbers could be questionable because stores in many areas remained closed and retailers were not in their offices to respond to the Census Bureau’s monthly survey of sales data.
NRF’s calculation of retail sales – which excludes automobile dealers, gasoline stations and restaurants in order to focus on core retail – showed May was up 11 percent seasonally adjusted from April and up 1.7 percent unadjusted year-over-year. NRF’s monthly increase was lower than the Census Bureau’s because the categories NRF excludes were among those most affected by the shutdowns.
Every category of retail saw month-over-month gains, with some of them dramatic, especially among retailers that had been mostly closed the month before – clothing stores were up an unheard-of 188 percent while furniture stores were up 89.7 percent and sporting goods stores were up 88.2 percent. But year-over-year gains online and at retailers that had remained open such as grocery stores and drug stores were largely offset by drops in other categories.
Clothing and clothing accessory stores were up 188 percent month-over-month seasonally adjusted but down 63.3 percent unadjusted year-over-year.