Retail sales fell 0.1% in May, after a revised 0.3% increase in the prior month. Retail sales last declined in June 2010 led by lower gasoline prices. Auto sales dropped in May, which is consistent with the unit auto sales numbers published earlier in the month.

The decline in auto sales was partly related to the disruption of supply after the natural disaster in Japan and partly due to weakness in demand. Among the other major components of retails, sales of gasoline (+0.3%), apparel (+0.2%) and building materials (+1.2%) moved up in May, while all other major components of retail sales fell. Excluding autos and gasoline, retail sales in May increased 0.3%, matching the increase seen in April. The April-May average of retail sales points to a noticeable slowing of consumer spending in the second quarter (+ 4.4% vs. +10.5% in 2011:Q1).

Asha Bangalore — Senior Vice President and Economist

http://www.northerntrust.com

Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.

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