May Retail Sales Drop More Than Expected as Auto Purchases Fall

12:00 PM EDT, 06/17/2025 (MT Newswires) -- US retail sales fell more than market expectations in May amid declines in purchases of motor vehicles and building materials, data from the Census Bureau showed Tuesday.

Sales were 0.9% lower last month following April's 0.1% decline, which was revised from the initially reported 0.1% increase. The consensus compiled by Bloomberg called for a 0.6% sequential drop in May retail sales.

Spending on motor vehicles and parts declined 3.5% after a 0.6% drop in April. Building material and garden equipment sales turned negative, reflecting a 2.7% fall.

"A flurry of activity in anticipation of tariffs boosted consumer spending earlier this year, but that momentum is now looking to have run its course, with retail sales declining in both April and May," said Ksenia Bushmeneva, economist at TD Economics.

President Donald Trump announced reciprocal tariffs early in April and later paused them for non-retaliating countries.

The US and China recently agreed on a framework for implementing a trade deal that suspended most tariffs on each other's imports for 90 days. The latest development came after the two nations accused each other of violating the pact.

"Consumers have shown more caution recently, with saving rate moving higher in April -- potentially signaling rising precautionary savings," Bushmeneva said. "A pullback in spending on dining out, which also eased in May, may further suggest that consumers' willingness to spend on discretionary items might be waning."

Outlays at gasoline stations were 2% lower last month, while sales at food services and drinking places fell 0.9%, government data showed.

A University of Michigan survey showed Friday that consumer sentiment in the world's biggest economy improved more than expected this month, while year-ahead inflation expectations dropped to their lowest level in three months.

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