WASHINGTON (AP) — Retail sales dropped 0.9 percent in May, according to a new report from the Commerce Department. Sales had declined 0.1 percent in April.
The May figure was lower due to a drop in auto sales after Americans ramped up their car-buying in March. Excluding autos, sales fell 0.3 percent.
Inflation has cooled steadily and unemployment remains low, which economists say could fuel steady spending in the coming months as the economy has remained mostly solid.
A category of sales that excludes volatile sectors such as gas, cars and restaurants rose last month by 0.4 percent, a sign that consumers are still spending on some discretionary items.
Economists say that, overall, the report suggests consumers have pulled back a bit, but not dramatically so.
The retail sales report covers about one-third of consumer spending, with the other two-thirds consisting of spending on services. Economists expect overall consumer spending to grow in the April-June quarter.
“Today’s data suggests consumers are downshifting, but they haven’t yet slammed the brakes,” Ellen Zentner, chief economic strategist for Morgan Stanley wealth management, said in an email. “Like the economy as a whole, consumer spending has been resilient in the face of tariff uncertainty.”
Many categories did see declines. Car sales fell 3.5 percent, while sales at home and garden centers dropped 2.7 percent. Sales fell 0.6 percent at electronics and appliance stores and 0.7 percent at grocery stores.
There were some bright spots: Sales rose 0.9 percent at online retailers, 0.8 percent at clothing stores and 1.2 percent at furniture stores.
Sales at restaurants and bars, a closely watched indicator of discretionary spending, fell 0.9 percent in May, though that followed a gain of 0.8 percent in April.
Many retailers built up large inventories this spring after President Donald Trump warned that he would impose widespread import taxes. Traffic at the port in Los Angeles has fallen in recent weeks, suggesting fewer goods are entering the United States.
Some consumer products companies say they are seeing the impact of tariffs on their own costs and sales.
Paul Cosaro, CEO of Picnic Time Inc., which makes picnic accessories such as baskets, coolers and folding chairs, said that orders from retailers are down as much as 40 percent this summer compared with a year ago. His company sells to a variety of stores, such as Target and Williams-Sonoma.
Cosaro noted that some stores have been cautious because they’re not sure how shoppers will react to higher prices. Some cancelled orders because Cosaro couldn’t tell them how much the new prices would be due to uncertainty.
Approximately 80 percent of the company’s goods are made in China, with the rest made in India and Vietnam.