The Commerce Department said total retail sales dropped 1.2
percent, the largest decline since September, after rising by an upwardly
revised 0.6 percent in April. Sales in April were previously reported to have
increased 0.4 percent.
Analysts polled by Reuters had forecast retail sales rising
0.2 percent last month.
Retail sales, which had risen for seven straight months,
were up 6.9 percent compared to May last year.
"There's no getting around the fact you saw some
consumer retrenchment in the month of May. The number is going to call into
question the strength of consumer spending for the second quarter," said
Kevin Flanagan, chief fixed income strategist at Morgan Stanley Smith Barney in
Purchase, New York.
The decline in sales follows a report last week showing
private businesses unexpectedly held back on hiring in May after expanding
payrolls for two months, a trend which could undermine recovery from the worst
recession since the 1930s.
Restoring the economy to health is a key priority for
President Barack Obama and voter anguish over the slow pace of the recovery
could inflict heavy losses on the Democratic Party in November's Congressional
elections.
Sales last month were dragged downed by a record 9.3 percent
drop in receipts from building materials and garden equipment suppliers, which
could reflect a drop in construction following the end of a popular homebuyer
tax credit.
Motor vehicle and parts receipts also fell 1.7 percent,
although dealers reported a rise in sales.
Excluding autos, sales fell 1.1 percent in May, the largest
decline in 14 months, after rising 0.6 percent in April. Markets had expected
sales excluding autos to gain 0.1 percent.
However, core retail sales — which exclude autos, gasoline
and building materials — rose 0.1 percent after falling 0.2 percent in April.
Core sales correspond most closely with the consumer spending component of the
government's gross domestic product report.
Clothing and clothing accessories sales dropped 1.3 percent,
while gasoline receipts fell 3.3 percent, the largest decline since March 2009.
There were a few bright spots in the report, with sales at
sporting goods, hobby and book stores rising 0.4 percent in May after falling
1.3 percent in April.
