|Month over Month||0.2%||-0.1%||0.7%|
|Year over Year||0.3%||0.0%|
Retail sales were disappointingly weak in May. Following an unrevised 0.7 percent increase in April, nominal purchases dipped 0.1 percent on the month for unadjusted annual growth of just 0.3 percent.
The monthly headline decline was at least wholly attributable to a 0.2 percent drop in food and non-food sales managed to stabilise over the period. Volumes performed in similar fashion.
In fact, despite a soft May, average real retail sales in the first two months of last quarter were still up nearly 0.4 percent versus their first quarter mean. Moreover, Istat's latest survey found consumer confidence rising in June when buying intentions also firmed. If confirmed in the actual spending data, this would greatly increase the likelihood of a positive, if probably only modest, contribution from household consumption to second quarter real GDP growth.
Retail sales measure the total receipts at stores that sell durable and nondurable goods. The monthly change in the headline figure, which is reported in volume terms, is only disaggregated into food and non-food categories.
With consumer spending a large part of the economy, market players continually monitor spending patterns. Retail sales are a measure of consumer well-being. The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.
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