–Retail Sales Excluding Motor Vehicles Rose 12.4%; Vehicle Sales Surge 44.1%
–Industrial Production Rose 1.4%, Motor Vehicle Production Rebounds by 120.8%
–NAHB Index Jump To 58 in June From 37 in May, Suggests Stronger Home Building Ahead
–Business Inventories Down 1.3% in April, Business Sales Down 14.4%
By Kevin Kastner
WASHINGTON (MaceNews) – As social distancing eased in May, retail sales and industrial production rebounded from sharp declines in April. Motor vehicles were key to both series.
The May rebounds are not a surprise and should continue in June as more state restrictions are reduced. The concern is the fall, when the second stage of the virus is expected to occur.
Total retail sales rose by 17.7%, well ahead of the 7.5% gain expected, with increases seen in every sales sector as states moved to reopen, the Commerce Department reported Thursday. Motor vehicle sales jumped by 44.1% as dealerships could resume in-person sales.
Retail sales excluding motor vehicles rose by 12.4% in May, more than twice the 5.2% gain expected. Gasoline station sales, which plunged during the shutdown as drivers stayed home, by 12.8%.
Clothing stores sales jumped by 188% in the month after being one of the hardest hit sectors due to social distancing. This sector should continue to improve, but some shoppers are likely to still be more comfortable ordering online rather than go to malls.
Sales at non-store retailers, which represent internet-based outlets, rose 9.0%. This was the only category to post gains throughout the shutdown period. Food store sales rose by 2.0% after rising solidly in March and falling in April.
Food services and drinking place sales jumped by 29.1% after a 34.6% decline in April, as restaurants partially reopened with outdoor dining in many areas and indoor dining in some areas. Building material sales rose by 10.9% in the month after a 2.4% April decline.
The closely-watched control group – total sales excluding motor vehicles, gasoline, building materials, and food services – rose by 10.6% after a 12.6% decline in April. Analysts expected control group sales to rise by 4.3%.
April retail sales were revised up to a 14.7% decline from the 16.4% drop previously reported, while ex-motor vehicle sales were revised up to a 15.2% drop from the previously reported 17.2% decline.
Industrial production, released by the Federal Reserve later in the morning, rose by 1.4% in May, below the 2.9% gain expected and with a large rebound in motor vehicle and parts production the key factor in the monthly increase.
Manufacturing production rose by 3.8%, led by a 120.8% rebound in motor vehicle production as demand resumed and factories reopened in May. Analysts had expected a 3.6% manufacturing production increase in the month.
Excluding motor vehicles, overall industrial production would have been flat and manufacturing production would have been up 2.0%.
Utilities production fell by 2.3%, with electricity production down 1.1% and natural gas production fell 8.1%. Mining production plunged by 6.8%, a fourth straight decline.
Released later in the day, the National Association of Home Builders June housing market index rebounded to a reading of 58 from 37 in May and 30 in April, with gains over 20 points in the the present situation, 6-month outlook, and buyer traffic measures.
While the gain is welcomed, the index remains well below the reading of 72 seen in March before the full impact of social distancing. It does suggest recovery in home building in the coming months.
Business inventories fell by 1.3% in April, with retail inventories revised down to 3.7% decline from the 3.6% drop in the advance reading. Wholesale inventories were already reported up 0.3%, while factory inventories fell 0.4%. Business sales declined by 14.4%, with drastically lower sales at all three levels in the pipeline. Both inventories and sales should rebound in May.
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Contact this reporter: kevin@macenews.com
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