Retail Sales Rose in May, But Trade Group Warns of Spending Shift

Retail sales grew in May, according to a fresh analysis, but uncertainty is shifting consumer behavior, leaving retailers eager to pinpoint where it’s headed.

Core retail sales—which excludes restaurant, car and gas spending—rose about 0.2% from April to May, and 4.2% from a year earlier, the National Retail Federation said Friday. Spending growth has slowed, which the trade group said in part reflects fewer consumers stocking up on goods in an attempt to beat tariff-fueled price increases.

“While momentum remains, the nature of consumer spending is shifting as economic uncertainty increases,” NRF President Matthew Shay said in a press release. “Consumer fundamentals haven’t been damaged yet, and a slowing-but-still-growing job market is supporting household priorities ahead of any meaningful price increases in the coming months.”

Spending on digital products, such as games and books, shot up about 28% year-over-year in May, and sporting goods sales rose 8.2%, the NRF said. But sales at building and garden supply stores fell 7.3% over the past year, it said. The federal government is slated to release its own retail sales figures for May on Tuesday.

The University of Michigan’s Index of Consumer Sentiment rose 16% from May to June—marking the first increase in six months. Unease about the economy remains high by historical standards, but has come down as the White House has moderated its stance on tariffs.

Under a proposed trade deal with China, President Donald Trump may keep tariffs on Chinese exports at the current level, rather than the prior 145% tax. The U.S. may also maintain 10% tariffs on goods from a number of trading partners past July, when higher import taxes are slated to go into effect, officials said.

A number of retailers are searching for signals on how consumers will respond to the latest twists in domestic trade policy. Shoppers have been relatively cautious, apparel companies J.Jill (JILL) and Oxford Industries (OXM) said on earnings conference calls this week.

“Concern about the impact of tariffs on prices in the economy is exacerbating weak consumer sentiment,” Oxford Industries CEO Thomas Caldecot Chubb III said, according to a transcript made available by AlphaSense.

Assessments are complicated by the fact that Americans endured years of high inflation, beginning amid the pandemic, said Howard Friedman, CEO of Utz Brands (UTZ), which sells chips, pretzels and other snacks.

“The consumer may be taking a little bit of a break,” Friedman said at a conference this week.