Despite Monthly Decline, May Retail Sales Reach Near-Record Level

Retail sales remained at elevated levels in May despite month-to-month fluctuations that masked near-record performance, the National Retail Federation (NRF) said today. The Commerce Department reported on Tuesday that May retail sales declined 1.3 percent month-over-month. However, the industry's largest trade association says the May sales data doesn't tell the whole story.

“While May retail sales were down slightly, largely due to supply chain constraints, the more accurate indicator remains in the year-over-year data which, as the NRF calculates, showed growth of over 17 percent,” NRF President and CEO Matthew Shay said. “For the first five months of this year, retail sales are already tracking 17.6 percent above the same five months of 2020, giving us further confidence in our newly revised sales forecast of growth between 10.5 percent and 13.5 percent to more than $4.44 trillion for 2021. While there are downside risks related to labor shortages, supply chain bottlenecks, tax increases and over-regulation, overall, households are healthier, and consumers are demonstrating their ability and willingness to spend.”

Total Retail's Take: The ominous headlines that May's retail sales declined, suggesting a slowdown in the economy's recovery, need to be taken with a grain of salt. The retail sector has recorded solid growth in the first five months of the year, driven by a combination of factors, including stimulus packages, increasing vaccination rates, and greater consumer confidence. The NRF is banking on those trends continuing for the second half of 2021, illustrated by its recently boosted annual sales forecast.

"The YoY comparison shows a robust rebound in May," says Naveen Jaggi, president, retail advisory services, JLL. "This summer, we can expect consumer confidence to continue to make gains as more people to return to the office, socialize, shop, and eat at their favorite local restaurants. Theater in particular is a good indicator for sentiment and how people are feeling. While domestic demand for in-theater movies continues to recover, movie theaters had their best weekend of the pandemic over Memorial Day weekend. Cinemark saw a 54 percent increase in traffic from April to May and traffic has increased 90 percent since the start of the year, according to Placer.ai. data.

"Additionally, in July and August we're expecting back-to-school shopping to be one of the highest we've seen as many students return for the first time in over a year to in-person learning."