US retail sales jumped in May by the most on record and double forecasts, regaining more ground than expected after unprecedented drops the prior two months as states allowed more merchants to reopen.
Sales soared 17.7% from the prior month, the most in data going back to 1992, following a revised 14.7% slump in April, according to Commerce Department data issued Tuesday. The median forecast in a Bloomberg survey of economists called for a 8.4% gain in May.
Stock-index futures extended gains and 10-year Treasury yields rose after the report. All categories increased in May, including a 44.1% surge in sales of motor vehicles and a 29.1% jump in restaurant receipts. Together, those categories accounted for more than half the overall gain in sales. Even with the improvement, the value of all retail sales remained 6.1% below last year’s level.“As states began to reopen their economies, households reopened their wallets,"said Andrew Grantham, economist at CIBC. “However, this is probably the easier part of the recovery in consumer spending, with pent-up demand as consumers sat at home supported by stimulus checks many households received in April. While those factors could support another strong gain in sales in June, thereafter the recovery will get slower and more uneven."
The figures suggest that the economy is rebounding faster than anticipated after entering in February what’s likely to be the steepest downturn since the Great Depression.
After months of being stuck at home, Americans began to travel and shop as states relaxed lockdowns on businesses. An uptick in the labor market in May and income support for those who lost their jobs during the pandemic helped underpin spending.