May U.S. Retail Sales Back from the Brink

Lines that Sink, Bob Back Up and Soar

There are some eye-catching results to be observed from the Census Bureau’s Advance Monthly Sales for Retail and Food Services, May 2020 report. After shopkeepers posted terrible results in April, there were some astonishing bounce-backs in May.

The following seven graphs mainly speak for themselves. There are lines that plummet severely and stay depressed. But there are also lines that sink sharply, then soar again. And in at least one instance, for non-store retailers, there’s a curve that shoots directly upwards in a manner almost never seen anywhere else before.

U.S. total retail sales in May were +16.8% month to month, leaving them only -1.4% year over year. Much of the thanks for the m/m improvement goes to ‘motor vehicle and parts’ sales, which were +44.1% m/m, but still negative to the tune of -3.9% y/y. Auto sector sales accounted for the largest share of ‘total retail’ in May, at 22.1%.

Auto dealers have been offering once-in-a-decade pricing discounts and financing deals. The last time there were comparable bargains was during the 2008-09 recession. (In those days, two of North America’s Big Three automakers needed to seek bankruptcy protection.)    

Graph 1: Total Retail Sales in U.S. Monthly

Graph 2: U.S. Motor Vehicle & Parts Sales Within Total Retail

Astonishing Success for Non-store Retailers

The second largest contributor (at 19.3%) to total U.S. retail sales in May was the ‘non-store’ category. ‘Non-store’ includes retailers who sell mainly over the Internet or through electronic auctions.

Sales by non-store retailers were a commendable +9.0% month to month, but an outstanding 30.8% year over year in May (Graph 3).

Graph 4 shows the volume of non-store retail sales ascending steeply, in a manner that few retailers would ever let themselves dream of achieving, knowing they would almost surely be disappointed. 

Graph 3: U.S. Retail & Food Services Sales Y/Y – May 2020

Graph 4: U.S. Retail Sales through Electronic Shopping & Mail-Order Houses

Glimmers of Light for Restaurants and Bars

Now that re-openings are underway, ‘food services and drinking places’ are doing a little better. Their May sales were much improved month to month, +29.1%, but they remained underwhelming year over year, -39.4%.

Graph 5 showcases a one-of-a-kind stark contrast in sales activity between two sectors ‒ upbeat non-store retailers compared with continuing-to-be-distressed restaurants and bars.

Graph 6 also highlights a hospitality sector that has been hurt by the pandemic far more than the retail side of the economy.

Graph 5: U.S. Sales by Food Services & Drinking Places vs Non-Store Retailers (i.e., Internet Platforms & E-Auctions)

Graph 6: Year-Over-Year (Y/Y) U.S. Monthly Sales,
Retail vs Food Services & Drinking Places

Home-related Retail Sales Hit & Miss

As for retail sales that relate most directly to home ownership, renovation activity and new residential construction, Graph 7 sets out crucial disparities.

With respect to items purchased for use in the home, ‒ i.e., ‘furniture and home furnishings’ and ‘electronics and appliances’ ‒ their sales volumes were still deeply negative year over year in May, each down by nearly one-third on a three-month moving average basis.

On a positive note, though, sales of ‘building materials and garden equipment’ were quite sprightly, +8.5% y/y (again, as a three-month moving average.)

It would seem there’s a lot of home remodeling going on and/or many individuals have become resigned to staying put this summer and are choosing productive yardwork to occupy their time.

Graph 7: U.S. Home-related Retail Sales − Three Months Smoothed

Alex Carrick is Chief Economist for ConstructConnect. He has delivered presentations throughout North America on the U.S., Canadian and world construction outlooks. Mr. Carrick has been with the company since 1985. Links to his numerous articles are featured on Twitter @ConstructConnx, which has 50,000 followers.