In mixed economic news that pushed the U.S. markets down and brought them back up again, retail sales for May dropped unexpectedly lower for the first time in months while consumer sentiment showed surprising strength once again in early June.
The U.S. Commerce Department reported that retail and food services sales for May decreased 1.2% from April. Though sales are 6.9% higher than a year ago, economists had predicted a rise of about 0.4%, so the dip roiled the markets briefly. Americans last month cut spending by an average of 1.1% on everything from clothing to building materials, and auto sales fell 1.7%.
“The key culprit here is the building materials component, where sales plunged a gigantic 9.3%, following enormous increases totaling 17.1% in the previous two months,” said Ian Shepherdson, chief U.S. economist for High Frequency Economics in Valhalla, N.Y.
“These two months were much weaker than the previous two, when this measure of core activity rose by an average of 1.1% per month,” Shepherdson said. “This strong performance likely reflected a combination of tax refund spending, post-winter storm repair spending and a boost from tax rebates for energy efficiency appliances. With these effects all now gone, the weaker underlying picture is revealed.”