U.S. retail sales dropped more than expected in May, weighed down by a decline in motor vehicle purchases as a rush to beat potential tariffs-related price hikes ebbed, but consumer spending remained supported by solid wage growth.
Retail sales fell 0.9% last month after a downwardly revised 0.1% dip in April, the Commerce Department’s Census Bureau said on Tuesday.
Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, decreasing 0.7% after a previously reported 0.1% gain in April.
Estimates ranged from a 1.7% drop to a 0.3% increase. Sales last month were also held down by lower receipts at service stations because of a decline in gasoline prices.
President Donald Trump’s sweeping tariffs have raised fears over global growth, restraining oil prices. But hostilities between Israel and Iran have boosted oil prices. Unseasonably cooler weather likely also hurt sales.
Federal Reserve officials prepared to start a two-day policy meeting on Tuesday. The U.S. central bank was expected to keep its benchmark overnight interest rate unchanged in the 4.25%-4.50% range while policymakers monitor the economic impact of tariffs and tensions in the Middle East.
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Author: Dillon B
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