May retail sales fell 1.3% as Americans spend less on goods

New York – Retail sales fell in May, dragged down by a decline in auto sales and a shift by Americans to spend more on vacations and other services instead of goods.

Total sales dropped a seasonal adjusted 1.3% in May from the month before, the U.S. Commerce Department said Tuesday. Wall Street analysts expected a smaller decline of 0.5%.

Economists expected retail sales to drop last month because of the lack of cars available for sale due to a worldwide shortage of chips, which are needed to power in-car screens and other features. Sales at auto dealerships fell 3.7% last month, according to the Commerce Department.

Another reason for the decrease: As more people become vaccinated and head out more, Americans are spending more of their money on haircuts, trips and other services that are not included in Tuesday’s report. Sales fell at furniture, electronics and home building stores last month.

“Consumer spending growth through the rest of the year will shift to services from goods,” wrote PNC chief economist Gus Faucher.

Sales at restaurants rose nearly 2%, according to Tuesday’s report. And those seeking a new outfit to go out in helped sales at clothing stores rise 3%.