US retail sales rose for a second straight month in May, as Americans splashed out on autos, electronic gadgets and appliances.
Headline retail sales rose 0.5 per cent month-on-month in May, the commerce department said on Friday. That was a shade below expectations for a 0.6 per cent gain and compared to a revised 0.3 per cent increase — up from the initial report of a 0.2 per cent decline — in April.
So-called control retail sales, which strip out volatile items like petrol and building materials, among others, also climbed 0.5 per cent, ahead of forecasts for a 0.4 per cent rise.
Retail sales have been on a wild rollercoaster ride this year, growing at a healthy clip in January, then dropping in February, followed by the biggest gain in 18 months in March.
This has complicated policymakers’ ability to gauge the mood of consumers. May’s retail sales report is likely to do little to dispel concerns that the US economy is beginning to lose momentum as trade disputes with China start to take their toll on corporate confidence. This sense of caution has only heightened after US hiring slowed sharply in May.
Fed chairman Jay Powell signalled last week the central bank stood ready to cut interest rates, and would “act as appropriate to sustain the expansion” in response to the economic impact of escalating trade wars. Meanwhile, traders have priced in as many as four rate cuts this year.
Fed policymakers will be meeting next week to deliberate on monetary policy. A rate cut is not expected when the decision is issued on Wednesday.
Treasuries gave up their rally after the data came out, pushing yields higher. Yield on the benchmark 10-year note stood at 2.09 per cent. It had been as low as 2.058 per cent earlier this morning. The two-year Treasury yield was up 2.1 basis points at 1.8508 per cent. It had been down by a similar margin at 1.8079 per cent prior.
US stock futures held on to their losses, with S&P 500 futures down 0.2 per cent.