Overall retail sales down sharply from May 2019

WASHINGTON — The reopening of stores shuttered by the COVID-19 outbreak boosted retail sales in May, which were up dramatically compared to April, the National Retail Federation reported Tuesday. But sales were still way down from the same period last year.

“Today’s sales report is very encouraging news at a time when we need to focus on what will happen as retail doors open once again,” NRF President and CEO Matthew Shay said during an interview on CNBC’s Squawk Box program Tuesday morning. “For a sick economy, there is no better medicine than retailers responding to consumers who are ready to safely return to stores. These sales numbers do not reflect the same strength we had going into the pandemic, but they certainly reflect the trajectory we need coming out of it.

“The most important thing now is to keep these retail stores open for business and not penalize them by closing their doors in the event of a coronavirus surge. As those stores that remained open – our economic first responders – have shown, retailers have developed solutions that protect the safety of their customers and associates, and they are sharing those lessons to the benefit of store owners large and small in communities across the country.”

NRF chief economist Jack Kleinhenz attributed the economic lift to the reopening of businesses, pent-up consumer demand after two months of shutdowns, and to the fact that many consumers had supplemental unemployment checks that supported their ability to spend.

“But full recovery is still a long way off,” Kleinhenz said. “Comparisons against April have to be taken in context because April was a full month when almost everything that wasn’t deemed ‘essential’ was shut down. Spending has improved considerably but it’s still far below where it was a year ago, and while the freefall in consumer confidence is over, unemployment remains high and confidence is still at recession levels.”

Looking ahead, Kleinhenz said consumers are eager to shop and retailers are ready to welcome them back, but the health of the economy remains uncertain.

“What we need to look at is the trajectory of employment and the direction of the virus,” he said. “There’s hope for a turnaround in the economy in the third quarter but if the virus has a reawakening, we’re going to see some serious situations for consumers.”

The U.S. Census Bureau said today that overall retail sales during May were up 17.7% seasonally adjusted from April but down 6.1% year-over-year. That follows a record-setting 14.7% month-over-month drop in April.

Kleinhenz warned that May’s sales numbers may not be entirely reliable. Retail businesses in many parts of the country remained closed last month, and retailers may not have been in their offices to respond to the Census Bureau’s monthly survey of sales data.

NRF’s own calculation of retail sales — which is based on the Census figures but excludes automobile dealers, gasoline stations and restaurants in order to focus on core retail — showed that May sales were up 11% seasonally adjusted from April and up 1.7% unadjusted year-over-year. NRF’s monthly increase was lower than the Census Bureau’s because the categories NRF excludes were among those most affected by the shutdowns.

Every retail category saw month-over-month gains, according to NRF: clothing stores were up 188%, furniture stores were up 89.7% and sporting goods stores were up 88.2%. But year-over-year gains online and at retailers like grocery and drug stores that that had remained open were mostly offset by drops in the other kinds of retail stores that were closed in April and in much of March.

According to NRF and the Census Bureau:

• Clothing and clothing accessory stores were up 188% month-over-month seasonally adjusted in May but down 63.3% unadjusted year-over-year.
• Furniture and home furnishings stores were up 89.7% month-over-month seasonally adjusted but down 23.2% unadjusted year-over-year.
• Sporting goods stores were up 88.2% month-over-month seasonally adjusted and up 6 percent unadjusted year-over-year.
• Electronics and appliance stores were up 50.5% month-over-month seasonally adjusted but down 30.9% unadjusted year-over-year.
• Building materials and garden supply stores were up 10.9% month-over-month seasonally adjusted and up 10.8% unadjusted year-over-year.
• Online and other non-store sales were up 9% month-over-month seasonally adjusted and up 25.3% unadjusted year-over-year.
• General merchandise stores were up 6% month-over-month seasonally adjusted and up 1.6% unadjusted year-over-year.
• Grocery and beverage stores were up 2% month-over-month seasonally adjusted and up 14.3% unadjusted year-over-year.
• Health and personal care stores were up 0.4% month-over-month seasonally adjusted but down 12.6% unadjusted year-over-year.