NEW YORK, N.Y. – In the latest sign that Americans are feeling better about the overall economy, stores across the country had a pickup in revenue in May.
An improving job picture, better housing market and stock market rallies have all led to consumer confidence reaching 5-year highs, leaving Americans a bit more likely to reach into their pockets and spend, monthly sales reports from retailers showed Thursday.
Revenue at stores open at least a year — an industry measure of a store’s health because it excludes results from stores recently opened and closed — rose 3.2 per cent in May compared with the same month a year ago, according to a preliminary tally of 12 retailers by the International Council of Shopping Centers.
The increase continues a gradual sales uptick that began in early spring. The measure rose 3 per cent in April.
“Some underlying improvement in the U.S. economy along with an improving ‘wealth effect’ from rising stock and home prices is helping to lift the sales pace,” said Michael Niemira, chief economist at the ICSC.
While big chains such as Wal-Mart Stores Inc., Target Corp and Macy’s Inc. don’t report monthly revenue, the stores that do offer economists a snapshot of consumer spending habits. In total, the retailers that report monthly data represent about 6 per cent of the $2.4 trillion in U.S. retail industry sales.
Among the best performers were Costco Wholesale Corp., which reported revenue in stores open at least one year rose 5 per cent, though that fell slightly short of analyst expectations of a 5.5 per cent rise. The measure rose 6 per cent excluding changes in gas prices and the stronger dollar.
Discount department store operator SteinMart had surprisingly strong results, with the measure up 8.2 per cent, far above the 2 per cent that was expected. Ladies’ casual and career sportswear were also among its best categories for the month.
L Brands Inc., which operates Victoria’s Secret and Bath and BodyWorks and was formerly known as Limited Brands, said the figure rose 3 per cent, slightly below analyst expectations of a 3.2 per cent increase.
The reports came as the Labor Department said Thursday that the number of Americans seeking unemployment benefits fell 11,000 last week to a seasonally adjusted 346,000, a level consistent with steady job growth. Meanwhile, the stock market has been on a rally, rising every month this year and climbing to record levels this spring, although there has been some pullback in June. And housing prices rose 11 per cent in March, the sharpest 12-month increase in 7 years.
But despite the positive news about the economy, analysts expect modest but steady gradual growth rather than any significant spending uptick that we may have seen a decade ago.
“We’re not seeing higher gains like we saw in the mid-2000s when the real estate market was on the rise,” said Ken Perkins, president of research firm Retail Metrics LLC. “So many consumers still have homes underwater and are still playing catch up.”