Retail sales dropped by 0.2% as building material demand was sluggish and drops in gasoline prices weighed on sales at service stations, said a report released on Wednesday by the Commerce Department. Sales in April were revised to indicate a 0.2% decline instead of a 0.1% gain that had been previously reported.
Sales of motor vehicles increased by 0.8%, which for many was a surprise as manufacturers reported unit sales to be weak during May. Excluding auto sales, all other sales dropped by 0.4%, the largest decline in over two years, after seeing a 0.3% decline in April.
One chief economist said there is a clear indication of a slowdown in spending by consumers and suggests a slower growth period during the year’s second quarter. The Labor Department announced that its producer price index had dropped by 1% in May due to energy costs declining by over 4.3%.
Over the past three months, job growth is less, with employers hiring the fewest people in the last 12 months last month. The main worries are the combination of a slowing economy in the U.S. and the worsening sovereign debt crisis that is crippling Europe.
Growth estimates have been lowered by economists for the second quarter of this year to less than 2%. Gross Domestic Product was forecasted to previously be between 2 and 2.5%.