The United States Commerce Department announced this Tuesday that retail sales fell 0.2 percent in May versus a 0.3 percent rise in April. Economists had expected retail sales to fall 0.4 percent.
This is the first time in 11 months that sales have slipped, though the decline was less than expected, thereby softening the blow and giving optimism in economic activity picking up. The sharp drop was recorded in U.S. auto dealerships where auto sales dropped lower car receiving due to parts shortages following the Japan earthquake.
A separate report from the U.S. Department of Labor showed producer prices rose 0.2 percent, braking sharply from April’s 0.8 percent increase.
“The consumer isn’t dead. It’s good news for the day, and further evidence that while perhaps not robust, the recovery is bumping along in fits and starts,” said Michael Farr, president of Farr, Miller & Washington in Washington.
Recently a spate of weak economic data has come out of the U.S. Economists blame much of the economy’s weakness on high oil prices and supply chain disruptions from the devastating Japan earthquake.
Analysts do not believe in a second recession but instead are optimistic that economic activity will pick up in the second half of the year as gasoline prices continue to moderate and the situation in Japan improves.
The only issue though is sovereign debt problems in Europe, particularly the Greek debt issue, which could turn the tables.
After the release of the data today, the US Dollar surged against the Japanese Yen and the Swiss Franc.