Building and garden supply stores saw sales rise a healthy 0.9%, although this was down sharply from the 3.6% pace in April. The cool and wet weather likely played a role in keeping these sales contained. Strength was also seen in food and beverage stores, with sales rising 0.7% on the month following a 0.6% dip in April as stronger job growth allowed folks to loosen up the purse strings a bit on meals. On the other hand, most of the improvement was for meals at home, as sales at food and drinking places fell 0.4% after a 1.1% increase. It is likely that weather played a role here too as customers desiring to eat at establishments with outdoor seating decided instead to stay home during a cooler-than-average May.
Despite the resurgent housing market, sales at furniture and home furnishing stores dropped 0.8% in May following a 0.2% dip in April, and were down 0.5% from the prior year. This is interesting considering both home prices and job growth accelerated during the month. Weather could have played a part here too. Nobody wants to get a new couch delivered when it's pouring rain outside. We may see a rebound in furniture sales in June if the weather turns more seasonal.
Overall, the report was a good sign for consumer resilience and economic growth, especially in light of higher payroll taxes. Decent job growth should help to support sales in the near term. However, with savings rates so low (2.5% of personal disposable income as of April) and personal income growth slowing over the past couple of months, it remains to be seen how long consumers can keep up this pace of spending without even stronger job growth or healthier income growth. Without these, we could see a softer spending trajectory in the second half of the year.