Report: May Retail Sales Off as Economy Slows
Retail sales fell for a second straight month in May and wholesale prices dropped by the most in three years, raising prospects of additional monetary policy easing from the Federal Reserve to spur economic growth.
According to Reuters, the reports on Wednesday (June 12) added to a raft of other data, including employment and manufacturing, pointing to a downshift in the economic recovery. Consumer spending had been one of the key pillars of support for the economy in the first quarter, and the sales data led a number of economists to cut forecasts for second-quarter growth.
Analysts said the darkening outlook opened the door a bit wider to the possibility of a third round of so-called quantitative easing at a Fed meeting next week.
“We still believe the Fed would prefer to wait a bit longer on QE3 to see how the domestic and global situations play out, but the weak data certainly strengthen the argument for action,” said Michelle Girard, senior economist at RBS in Stamford, Connecticut.
Retail sales slipped 0.2% as demand for building materials sagged and declining gasoline prices weighed on receipts at service stations, a Commerce Department report showed. April’s sales were revised to show a 0.2% drop instead of the previously reported 0.1% gain.
Motor vehicle sales rose 0.8%, a surprise given that manufacturers reported weak unit sales during the month. Excluding autos, sales fell 0.4%, the biggest decline in two years, after dropping 0.3% the prior month.