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Canada News.Net
38 minutes ago
- Business
- Canada News.Net
May sees sharp retail decline in US following pre-tariff buying spree
WASHINGTON, D.C.: Retail sales dropped sharply in May as consumer spending slowed after a strong start to the year, primarily due to concerns over President Donald Trump's looming tariffs on nearly all imports. The Commerce Department reported a 0.9 percent decline in overall retail sales—including stores and restaurants—marking a deeper drop than April's 0.1 percent dip and reversing March's substantial 1.5 percent gain. A major factor in the decline was a significant pullback in auto sales. In March, many consumers rushed to purchase vehicles ahead of the expected 25 percent tariff on imported cars. As a result, auto sales plunged by 3.5 percent in May. Even excluding autos, retail sales still fell by 0.3 percent. Despite the downturn, some underlying economic indicators remain stable. Inflation is easing, unemployment is low, and a narrower sales measure—excluding cars, gas, and restaurants—actually increased by 0.4 percent, suggesting consumers are still spending selectively on discretionary items. Economists caution against reading the May dip as a sign of broad weakness. Retail sales make up about a third of consumer spending, while the rest comes from services like healthcare, education, and housing. Many analysts still expect modest growth in consumer spending during the April-to-June quarter. Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, said that while consumers are showing more caution, they haven't stopped spending altogether. She noted that, even amid uncertainty about tariffs, underlying demand remains resilient. Still, some sectors were hit hard. Home and garden store sales dropped 2.7 percent, while grocery, electronics, and appliance store revenues also declined. Restaurant and bar sales—a barometer of consumer confidence—fell 0.9 percent in May after rising in April. In contrast, online retailers saw a 0.9 percent increase in sales, clothing stores rose 0.8 percent, and furniture outlets gained 1.2 percent. Falling gas prices contributed to a 2 percent revenue drop at gas stations, offering some relief at the pump but also reflecting lower fuel demand. Businesses reliant on imported goods are increasingly impacted. Paul Cosaro, CEO of Picnic Time, said retail orders are down 40 percent compared to last summer, as tariff-related price uncertainty causes retailers to hold back. His company sources 80 percent of its products from China and has seen tariff costs triple—from about US$330,000 last year to $1 million this year—forcing a hiring freeze. Rising prices are reshaping consumers' shopping habits. Pennsylvania mother of three Liza Gresko said she now buys in bulk, chooses generic brands, and relies more on thrift stores to stretch her budget. Retailers are also adjusting, launching back-to-school promotions earlier to encourage spending before potential price hikes hit harder. While inflation remains manageable for now, companies like Walmart and Lululemon are already raising prices, signaling more challenging times may lie ahead.
Business Recorder
3 days ago
- Business
- Business Recorder
European shares fall as ME tensions weigh
FRANKFURT: European shares declined on Wednesday as investors awaited the Federal Reserve's monetary policy decision, with ongoing tensions in the Middle East adding to market uncertainty. The pan-European STOXX 600 index closed 0.4% down, at a near one-month low. The hostilities between Iran and Israel extended to a sixth day, with fears of a more direct US involvement after President Donald Trump asked for Iran's 'unconditional surrender'. However, Iranian Supreme Leader Ayatollah Ali Khamenei rejected Trump's demand for surrender. Defence stocks were among the biggest gainers, with the sector up 0.6%. Traders also stayed away from risk assets ahead of the Federal Reserve's policy meeting at 1800 GMT, where officials are widely expected to hold interest rates steady. Investors will closely watch policymakers' comments for signals on how the US central bank plans to navigate an uncertain trade environment. 'Rising geopolitical and trade uncertainties mean the Fed's growth and inflation forecasts may lack precision.', said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. The Fed faces additional challenges from potential inflation risks stemming from the escalating Middle East crisis. As the July 8 tariff-pause deadline approaches, many countries, including the EU are scrambling to strike a deal with Washington. European Commission President Ursula von der Leyen was still aiming to reach a deal by July 9. The only formal deal signed was the finalization of the US-UK agreement announced last month. Other major bourses indexes were largely mixed. London's FTSE 100 closed up 0.1% after data showed that British inflation eased as expected in May. Investors are now eyeing the Bank of England's rate decision on Thursday. 'With services inflation still elevated... the BoE looks nailed on to keep rates unchanged,' said Ruth Gregory, deputy chief UK economist at Capital Economics. Sweden's central bank cut its key interest rate to 2.00% from 2.25% as expected. Still, Stockholm's benchmark index dropped 0.1%.
Los Angeles Times
4 days ago
- Automotive
- Los Angeles Times
Americans turn cautious and retail sales slide after a spring spending surge to beat tariffs
WASHINGTON — Retail sales fell sharply in May as consumers pulled back from a spending surge early this year to get ahead of President Donald Trump's sweeping tariffs on nearly all imports. Sales at retail stores and restaurants dropped 0.9% in May, the Commerce Department said Tuesday, after a decline of 0.1% in April. The figure was pulled down by a steep drop in auto sales, after Americans ramped up their car-buying in March to get ahead of Trump's 25% duty on imported cars and car parts. Excluding autos, sales fell 0.3%. The sales drop is hitting after sharp declines in consumer confidence this year. Still, inflation has cooled steadily and unemployment remains low, which could fuel steady spending in the coming months, as the economy has remained mostly solid. A category of sales that excludes volatile sectors such as gas, cars, and restaurants rose last month by 0.4%, a sign that consumers are still spending on some discretionary items. Overall, the report suggests consumers have pulled back a bit but not dramatically so. The retail sales report covers about one-third of consumer spending, with the other two-thirds consisting of spending on services. Economists expect overall consumer spending to grow in the April-June quarter. 'Today's data suggests consumers are downshifting, but they haven't yet slammed the brakes,' Ellen Zentner, chief economic strategist for Morgan Stanley wealth management, said in an email. 'Like the economy as a whole, consumer spending has been resilient in the face of tariff uncertainty.' Yet many categories saw sharp declines. Car sales plunged 3.5%, while sales at home and garden centers dropped 2.7%. They fell 0.6% at electronics and appliance stores and 0.7% at grocery stores. There were some bright spots: Sales rose 0.9% at online retailers, 0.8% at clothing stores, and 1.2% at furniture stores. Sales at restaurants and bars, a closely watched indicator of discretionary spending, fell 0.9% in May, though that followed a solid gain of 0.8% in April. It is a difficult time for retailers, many of whom built up large inventories this spring after Trump warned that he would impose widespread import taxes. Traffic at the port in Los Angeles has fallen sharply in recent weeks, suggesting fewer goods are entering the United States. Some consumer products companies say they are seeing the impact of tariffs on their own costs and sales. Paul Cosaro, CEO of Picnic Time, Inc, which makes picnic accessories like baskets, coolers, and folding chairs, said that orders from retailers are down as much as 40% this summer compared with a year ago. His company sells to a variety of stores like Target and Williams-Sonoma. Cosaro noted that some stores have been cautious because they're not sure how shoppers will react to higher prices. Some cancelled orders because Cosaro couldn't tell them how much the new prices would be due to all the uncertainty. Roughly 80% of the company's goods are made in China, with the rest in India and Vietnam. The company, founded roughly 40 years ago and based in Moorpark, California, was forced to raise prices on average from 11% to 14% for this summer selling season, Cosaro said. A folding outdoor chair now costs $137 this month, up from $120 in late 2024, he added. The company's sales are still down this year, even though some shoppers accelerated their purchases out of concern that prices would rise. 'Shoppers are very price sensitive,' Cosaro said. The company has implemented a hiring freeze because of all the extra tariff costs, he added. So far this year the company, which employs from 70 to 100 people, has had to pay $1 million in tariffs. A year ago at this time, the bill was a third of that amount. The retail sales report comes as other evidence indicates shoppers have been pulling back more amid worries about higher prices from Trump's tariffs. Naveen Jaggi, president of retail advisory services in the Americas for real-estate firm JLL, said that he's hearing from malls that sales are slowing down heading into the official summer months. Retailers are pushing up back-to-school promotions to this month from July, he said. They want to get shoppers in early for fear consumers may not want to spend in the later months when prices will likely go up, he said. So far, Trump's tariffs haven't yet boosted inflation. Consumer prices rose just 2.4% in May compared with a year ago, the government said last week. Many stores and brands, including Walmart, Lululemon, and J.M. Smucker Co., have said they plan to or have raised prices in response to tariffs. Deckers Outdoor, which is behind such shoe labels as Hoka and Uggs, said late last month that it plans price increases, which will likely hurt sales. 'We expect to absorb a portion of the tariff impact,' Chief Financial Officer Steven Fasching told analysts. 'We also believe there is potential to see demand erosion associated with the combination of price increases and general softness in the consumer spending environment.' Rugaber and D'Innocenzio write for the Associated Press. D'Innocenzio reported from New York.
CNBC
4 days ago
- Business
- CNBC
Retail sales fell 0.9% in May, worse than expected as consumers pulled back
Consumers spending pulled back sharply in May, weighed by declining gas sales and a looming unease over where the economy is headed, the Commerce Department reported Tuesday. Retail sales declined 0.9%, even more than the 0.6% drop expected from the Dow Jones consensus. The decline reversed a 0.1% loss in April and came at a time of unease over tariffs and geopolitical tensions. Excluding autos, sales fell 0.3%, also worse than the estimate for a gain of 0.1%. However, excluding a series of items such as auto dealers, building materials suppliers, gas stations and others, sales increased 0.4%. That reading, known as the control group, is what the department uses when calculating gross domestic product. .
Business Recorder
4 days ago
- Business
- Business Recorder
Australia, NZ dollars take a breather after upside breaks
SYDNEY: The Australian and New Zealand dollars were just short of fresh highs on Tuesday as another bout of Middle East risk aversion swept markets, though both currencies found strong chart support to lean on. Hopes for a quick ceasefire were dashed by news of another round of Israeli air strikes on Iran, spooking investors and hitting equities while boosting oil prices. There was also speculation the United States was striking Iran itself, but these were quickly denied by the White House. The Aussie is highly correlated to global risk plays and took a quick fall, before steadying at $0.6530. That was off a seven-month top of $0.6552 reached overnight, while major support now lies around $0.6500 and $0.6463. The kiwi dollar held at $0.6066, having scored an eight-month peak at $0.6088 on Monday. It has solid support around $0.5996. Both were aided by gains on the yen as the Bank of Japan confirmed market speculation by slowing its bond tapering plans, albeit only from March next year. That should help relieve upward pressure on Japanese bond yields, at least at the margin, and helped lift the Aussie to 94.57 yen. Australia, New Zealand dollars vulnerable as Israel-Iran conflict escalates A break of 94.75 yen resistance would take it to the highest since mid-May. In New Zealand, data showed annual growth in food prices picked up to a 17-month high of 4.4% in May, a blow to hopes for a further slowdown in overall inflation. That led analysts at Westpac to revise up their forecast for second-quarter inflation to 0.6%, from 0.4%, which would lift that annual pace to 2.8% from 2.5%. 'Importantly, it looks increasingly likely that inflation will rise back to the top of the RBNZ's target band before year end,' noted Satish Ranchhod, a senior economist at Westpac. The Reserve Bank of New Zealand has already signalled it is near an end to its aggressive easing campaign and a higher reading on inflation would likely add to the case against further cuts. Markets are pricing only a 16% chance of a cut in July, but that rises to 68% for August.
