Retail sales started to bounce back last month — but still have a long way to go to return to pre-coronavirus levels.
Total retail and food service sales jumped a seasonally adjusted 17.7 percent in May from April, but compared to a year earlier, sales last month were still down 6.1 percent.
Apparel and accessories specialty stores showed the largest month-to-month gain, rising 188 percent in May compared with April, although the sector was still down 63.4 percent from a year earlier.
Department stores sales rose 36.9 percent from April and were down 25.8 percent from a year earlier.
General merchandise stores overall — a category that includes department stores as well as retailers such as Target and Walmart that sell essentials — were up 6 percent last month from April and flat versus a year ago.
After three months of relative lockdown, people are coming back to stores and even New York City, the initial COVID-19 epicenter, is open for curbside pick-up.
Wall Street has been searching for direction amid a jumbled mass of data detailing the unprecedented time and has lately been shifting between a comeback rally and worries over a second wave of infections.
The sales figures help push the bullish sentiment to the fore. The Dow Jones Industrial Average increased 2 percent, 526.82 points, to 26,289.98 on Tuesday. Among the retailer gainers were: Nordstrom Inc., up 12.9 percent to $19.50; Kohl’s Corp., 9 percent to $24.82; Gap Inc., 8.5 percent to $11.38; Capri Holdings, 8.2 percent to $18.40; Abercrombie & Fitch Co., 7.6 percent to $12.32; Urban Outfitters Inc., 6.5 percent to $18.35; Macy’s Inc., 6.3 percent to $7.64, and TJX Cos. Inc., 5.6 percent to $55.55.
“The [month sales] report is a blockbuster, demonstrating the indomitable strength of the American consumer,” said Craig Johnson, president of Customer Growth Partners. “Despite the crisis headlines, millions unemployed, civic protests and COVID-19 spikes, the American consumer is back and spending, like she has never been — as long as someone in the house has a job. Add to these 105 million households the government transfers and the record 33 percent personal savings rate, the consumer economy is like a coiled spring, just now being unleashed despite the troubling exogenous events.”
Johnson said the question now is how sustainable the growth will be.
“We are by no means out of the woods, but the consumer economy is clearly on the rebound,” he said. “And, based on our nationwide field teams surveys, consumers are returning to their more normal spending patterns: no more stockpiling of toilet paper, sanitizers, flour and yeast. But a return to spending on discretionary goods: everything from kayaks and paddle boats to home furnishings, outdoor/patio living, and exercise and sports gear.”
Still, there are plenty of lingering doubts. The rates of new infections have been rising in many U.S. states as people come out of their homes and start to circulate more — with or without masks meant to slow the pandemic.
Even if consumers do come back in full force, the same might not be true for retail, which has been slimming during the shutdown. Even strong players, like Nordstrom, have closed some stores for good, while others have filed for bankruptcy, including Neiman Marcus, J. Crew and J.C. Penney.
But there are also renewed hopes that the economic fallout might not last as long as some have been fearing.
Economic forecasting firm IHS Markit said Tuesday: “Ironically — and mercifully — the recessions triggered by the coronavirus disease 2019 [COVID-19] pandemic in the developed economies are likely to have been short. IHS Markit estimates that the recession lasted two months in the U.S. and eurozone (March and April) and three months in the U.K. (March, April, and May). For the U.S. economy, this would be the shortest recession on record (back to the 1850s). The prior record for the shortest recession was the six-month-long downturn in 1980.”