Retail sales fell in May, dragged lower by slumping auto sales and marking the first decline in 11 months, the government said Tuesday.Total retail sales slipped 0.2% last month, the Commerce Department reported. The decline broke a winning streak of consecutive monthly gains going back to June 2010. But from a year ago, sales were up 8%. Economists had expected a 0.7% drop, according to consensus estimates from Briefing.com.
Declines were led by a 2.9% slide in sales at motor vehicle and parts dealers. This drop overshadowed stronger sales at building material companies and restaurants, which came in the face of higher gas prices last month. Sales excluding autos and auto parts were 0.3% higher, beating forecasts for a 0.2% rise.
"The numbers we've been seeing from retailers lately have been running better than expected, and the number today excluding autos is better than expected," said Ken Perkins, an analyst at Retail Metrics. "But there's still definitely a soft patch unfolding here in terms of economic growth, which I think was reflected in sales of autos."
Perkins said the widespread supply chain disruptions sparked by the earthquake in Japan were mainly to blame for the big decline in auto sales last month.
But even taking auto sales out of the mix, many big areas like consumer electronics and appliances were disappointing, partly due to high gas prices.
Higher energy costs will drive inflation up and stall any "recovery" we are experiencing. It will be the summer of stagflation.