American consumers began returning to the national pastime in May—going shopping and spending much more money than economists had expected.
The U.S. government’s report on Tuesday morning buoyed Wall Street, which surged 4% on the upbeat news. The 17.7% growth was more than double what economists had forecast and the biggest monthly surge in nearly three decades.
Still, the dramatic increase in retail sales last month over April was largely the result of the cratering in consumer spending that occurred in April, the worst decline on record when, at the height of the lockdowns, most stores were closed across the country. Even with the jump in spending in May, retail sales were 6.1% below May 2019 levels, a sober reminder of how troubled much of the industry remains.
The Commerce Department’s data shows that the retailers that were struggling heading into the pandemic and recession—and were hit the hardest by the lockdowns—saw little relief, particularly clothing stores and department stores.
Clothing stores’ sales rose 188% in May compared with April, and department stores’ sales grew 36.9%, but compared with May 2019, the accurate reference point, they were down 63.4% and 25.8%, respectively. To be fair, much of that decline resulted from many of their locations still being closed last month, but the data shows how low a priority their wares are for U.S. consumers now and how much they have had to cut prices to entice shoppers.
“Even where stores have reopened, trade is building slowly and…consumers are reluctant to purchase. Extensive discounting, designed to clear down inventory, has also dampened sales values,” GlobalData Retail wrote in a research note.
Electronics were also way down from year-ago levels. Best Buy, the largest electronics retailer, has ended appointment-only shopping and will allow more shoppers into stores, so that trend may change in June.
Still, despite unemployment at decades-long highs, there were clear signs shopping for non-grocery items and other essentials was coming back to life. Sales at stores for sporting goods, musical instruments, and books surged—and were above May 2019 levels. Dick’s Sporting Goods recently reinstated its dividend because of how quickly business has bounced back. Furniture stores’ sales nearly doubled in May, and even though they remain 21% below 2019 levels, it’s still a good sign given those are big-ticket items consumers worried about the economy don’t typically make a priority.
And home improvement retailers like Home Depot and Lowe’s continued to thrive in May, with garden items surging as homebound consumers focused on their houses.
Food stores’ sales were about on par with April but way above May 2019 levels as Americans continued to eat at home rather than dine out. That could change this month with many major markets beginning to allow limited in-restaurant dining and more small restaurants offering curbside pickup. (McDonald’s on Tuesday said its U.S. comparable sales were down 5% last month, a much gentler drop than in March or April.)
And of course the big winner in this pandemic, e-commerce, continued to surge: What the U.S. government calls non-store spending, which is online shopping, was 31% above year-ago levels. That is not surprising given the surges reported by the likes of Amazon, Wayfair, Chewy, and Shopify merchants.
While certain big pockets of retail remain in jeopardy, the overall resilience of shoppers is an encouraging sign, said Moody’s vice president Mickey Chadha. He called the May figures “an astonishing feat, considering most of the nonessential retailers were still shut for a good part of May.”
More must-read retail coverage from Fortune:
- Stitch Fix’s new growth strategy: Letting non-clients shop directly, too
- Starbucks speeding up rollout of pickup-only stores in response to pandemic
- How yarn stores are adapting to and preparing for social distancing
- Walmart will stop locking up beauty products for black consumers
- Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
- WATCH: The ugly toll COVID-19 has taken on retail
