Core retail sales solid

June 17, 2026

May retail sales surged 0.9%, beating expectations for 0.6%, after increasing 0.4% in April. Excluding autos, retail sales jumped 0.8%, surpassing the consensus of 0.6%. After adjusting for inflation, retail sales advanced 0.4%.

Sales at motor vehicle and parts dealers rose 1.2%, the largest gain in nearly a year. Dealers sold 16.1 million new vehicles at an annualized pace in May compared to 15.9 million in April. Affordability remains a concern among a wide swath of buyers. Yet, higher income households with solid credit scores and rising net worth, buttressed by rising equity market valuations, have the means to purchase big-ticket items. 

Gasoline station store receipts advanced 3.4% after rising 2.4% in April, fueled by higher gasoline prices at the pump. The erosion in consumer purchasing power due to higher energy costs appears to have impacted food and beverage store sales. They were flat in May, the weakest result in three months. After adjusting for inflation, food and beverage store sales declined 0.2%. 

Sales at furniture stores rose 1% after declining 1.5% in the prior month. On an annual basis, home furnishing sales remain deep in negative territory, down 3.3%. The housing sector continues to be mired in recession.  

General merchandise store sales increased 0.4% with big-box discounters leading the way as department store sales fell 0.3%. Recent earnings calls from warehouse-type retailers report a resilient consumer. Online sales continue to advance. Online sales added another 1.5% after rising 1.1%, the fifth consecutive month of gains.

Sales at restaurants and bars slipped 0.1%, the first drop in four months. The kickoff of the FIFA World Cup should spur sales in June and July as fans root for their favorite teams at eating and drinking places. 

Core retail sales increased 0.7%. This includes autos, gasoline, restaurants and building materials stores and feeds directly into the GDP consumer spending calculation. This follows a 0.5% gain in April and suggests firm consumer spending. We project consumer spending to rise at a 2% annualized pace in the second quarter and real GDP to rise nearly 3%, an improvement from 1.6% in the first quarter.