U.S. Retail Sales Plunge 0.9% MoM in May, Marking Year's Sharpest Decline

U.S. retail sales in May recorded the largest decline since the start of this year, indicating that new tariff policies have curbed consumer spending, especially in the automotive sector.  

Data released by the U.S. Department of Commerce on the 17th showed:  

• U.S. retail sales fell 0.9% month-on-month in May, compared with an expected decline of 0.6%. The previous value was revised from +0.1% to -0.1%.  
• Sales excluding automobiles fell 0.3% month-on-month, versus an expected increase of 0.2%.  
•  "Control group" sales rose 0.4% month-on-month, higher than the expected 0.3%.  

Tariff concerns and high prices continue to suppress consumption  

Among the 13 categories covered in the retail sales report, 7 showed declines, with building materials and motor vehicles experiencing the most significant drops. Consumers had previously rushed to purchase goods in advance to avoid tariffs. It is worth noting that restaurant and bar spending, the only service sector category in the retail report, also saw the largest decline since early 2023.  

The data shows that after consumers snapped up cars and other goods to avoid tariffs from the Trump administration, they are now generally reducing spending. Although current tariffs have not significantly pushed up U.S. inflation, the continuous rise in the cost of living and high interest rates have shaken consumer confidence, and household financial conditions have become increasingly severe.  

A Bloomberg poll last month showed that three-fifths of respondents said they had cut back on spending due to concerns about a potential recession, mainly in service sectors such as dining out and entertainment.  

Nevertheless, "control group" sales linked to GDP slightly exceeded expectations and were slightly revised upward. Analysts believe that while the report may appear slightly weak, it may not immediately be reflected in current economic growth forecasts.