Zinger Key Points
- U.S. retail sales fell 0.9% in May, worse than expected, marking the second decline of 2025.
- Auto sales plunged 3.5%, while building material spending dropped 2.7%, dragging headline figures lower.
- 9 Out of the Last 10 Summers this "Power Pattern" Delivered Winners - Get The Details Now.
Editor’s Note: This article has been updated with additional content.
U.S. consumers showed signs of strain in May, as a key spending gauge contracted for the second time this year, fueling concerns of a demand slowdown amid tariff-related trade uncertainty.
Headline retail sales slumped 0.9% month-over-month in May 2025, a sharp drop from April's downwardly revised 0.1% decline, the U.S. Census Bureau reported Tuesday. The print came in worse than economists' already grim forecasts for a 0.7% decline.
On a year-over-year basis, retail sales rose 3.3%, decelerating from April's 5% annual growth.
Among the few bright spots in the report:
- Miscellaneous store retailers: +2.9% month-over-month
- Sporting goods, hobby, musical instruments, and bookstores: +1.3%
- Furniture and home furnishings stores: +1.2%
The major drop occurred in motor vehicle and part dealers, down 3.5% on the month. Building material was another weak spending category, down 2.7%.
Excluding autos, retail sales dropped 0.3%, deeper than April's 0.1% decline.
Meanwhile, the control group—which strips out food services, autos, gas, and building materials—rose 0.4% in May. This component feeds directly into the GDP calculation via the personal consumption expenditures (PCE) metric.
| May 2025 | April 2025 | Expectations | |
|---|---|---|---|
| Retail Sales MoM | -0.9% | -0.1% | -0.7% |
| Retail Sales YoY | 3.3% | 5.0% | |
| Retail Sales ex Autos | -0.3% | -0.1% | 0.1% |
| Retail Sales (control group) | 0.4% | -0.2% | 0.3% |
Market Reactions
U.S. equity futures edged lower early Tuesday, as escalating Middle East tensions dented investor risk appetite.
President Donald Trump abruptly exited the G7 summit in Canada, dismissing reports of a ceasefire between Israel and Iran and urging Tehran residents to evacuate.
By 8:55 a.m. ET, S&P 500 futures were down 0.5%, while Nasdaq 100 contracts slipped 0.6%. In fixed income, Treasury yields eased, with the 30-year yield dipping to 4.92% after briefly touching 4.97% on Monday.
The U.S. dollar held steady ahead of the Fed's two-day policy meeting. The central bank is widely expected to hold rates at 4.25%–4.50%, with markets pricing in a 75% chance of a first cut by September.
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