Retail sales dropped 1.3 percent in May, but services rose

US retail sales dropped more than expected in May, with spending rotating back to services from goods as vaccinations allow Americans to travel and engage in other activities that had been restricted by the COVID-19 pandemic.

“Activity decelerated likely on a shift from goods spending to services,” said Rubeela Farooqi, chief US economist at High Frequency Economics in White Plains, NY. “Despite the slowdown, sales are rising at a strong pace in the second quarter.” Retail sales fell 1.3 percent last month, the Commerce Department said. Data for April was revised higher to show sales increasing 0.9 percent instead of being unchanged as previously reported. Economists polled by Reuters had forecast retail sales declining 0.8 percent. Retail sales surged 28.1 percent on a year-on-year basis.