Retail News Update

NEW YORK (Reuters) – Retail sales excluding cars improved in May, as consumers shelled out more money for gasoline at the expense of other purchases, according to a private report released on Wednesday.

Consumer spending outside of cars and gasoline fell for a second straight month in May, according to SpendingPulse, the retail data service of MasterCard Advisors, an arm of MasterCard Worldwide (NYSE:MA – News).

Retail sales less autos rose 0.6 percent last month on a seasonally adjusted basis, compared with a 0.1 percent uptick in April. “Gasoline continued to bolster retail sales growth … but it’s taking away spending on other discretionary items,” said Kamalesh Rao, director of economic research at MasterCard Advisors. U.S. retail gasoline prices topped $4 a gallon on average for the first time last week, up from $3.67 a month ago and $3.10 a year ago, according to the American Automobile Association. Retail sales excluding cars and gasoline fell 0.5 percent in May, following a 0.7 percent drop in April. Moreover, “core” consumer spending — which excludes autos, gasoline and building materials — posted its biggest drop since February, SpendingPulse said. Core sales tend to be less volatile on a monthly basis, more indicative of overall spending trends.

Core consumer spending fell for a fourth straight month, despite expectations of a flurry of purchases from government tax rebate checks. SpendingPulse’s seasonally adjusted core retail gauge was down 0.5 percent in May, steeper than the 0.2 percent decline in April. It was down 1.0 percent in February. Meanwhile, the U.S. government will release its own retail sales survey at 8:30 a.m. EDT on Thursday.

Economists forecast the government’s overall May retail figure would show a 0.5 percent rise, rebounding from a 0.2 percent fall in April. They predicted its ex-auto reading would show a 0.7 percent increase compared with a 0.5 percent rise in April.

The SpendingPulse data are derived from the aggregate sales in the MasterCard U.S. payment network, coupled with estimates on all other payment methods including cash and check.