U.S. numbers may foreshadow Mass. retail sales surge

BOSTON - American retail sales grew surged in May after a dismal April, offering some encouraging news about the prospects of economic recovery and delivering a potential glimpse toward the near-term future in Massachusetts, where reviving public activity has lagged other parts of the nation.

Consumers spent $485.5 billion on retail and food services nationally last month, a 17.7% growth over the $412.6 billion spent in April, according to data published Tuesday by the U.S. Census Bureau.

May represented the first stretch of growth in sales after month-over-month declines of 8.2% in March and 14.7% in April, precipitous drops reflecting the widespread mandatory business closures aimed at limiting transmission of the highly infectious coronavirus.

Massachusetts did not start allowing establishments shuttered in response to the outbreak to start reopening until late May, and even today - in the first half of the Baker administration's Phase 2 - operations are still limited and some activity remains off limits. Customers have been permitted to shop inside retail stores in Massachusetts for about a week now.

However, it's possible that the national trends could take hold soon in Massachusetts. Jon Hurst, president of the Retailers Association of Massachusetts, said small businesses and state leaders will need to communicate to the public that "they can shop and dine locally safely."

"For economic investment reasons, it is important for them to do so to support the future of their Main Streets and small businesses," Hurst wrote in a Tuesday email to the News Service. "We all need to shop like jobs depend on it, because they do."

The resurgence in May at the national level represented the largest one-month percent increase in the history of the data series.

Despite that growth, overall sales remained lower than before the pandemic hit the United States in full force and prompted a national recession. In February, consumers spent about $527.3 billion on retail and food services.

"The dramatic bounceback in retail sales last month is an extremely positive sign for the direction of the U.S. economy, but the declines over the past few months have squeezed many U.S. retailers," Jaime Ward, head of retail finance for Citizens Bank, said in a statement. "The Covid-19 pandemic accelerated a disruption of the retail sector that was already well under way as more consumers shifted from bricks and mortar stores to online shopping. Retailers that were able to stay open during the pandemic such as grocery stores and others that had invested in their e-commerce platforms have fared better than those who relied more on bricks and mortar stores for sales or were over-leveraged."

Officials are attempting to balance the dual public health and economic crises. More than 115,000 Americans have died due to COVID-19 so far, while the shutdowns pushed unemployment to a record 14.7% in April before a slight drop to 13.3% in May.

Labor officials will release the May unemployment rate for Massachusetts on Friday, which could offer more insight into the current economic climate. Many of the jobs lost have been in retail or food service.

Data RAM collected in a May survey showed that about 30% of its member businesses questioned whether they would be able to reopen after the pandemic. Four out of five had seen sales decline between 26% and 100%, Hurst said.

While retail sales figures for May are not yet available for Massachusetts, Hurst pointed to sales tax collections at the state level as "better than some would have anticipated" in recent months as evidence that a rebound could be coming.

In April, he said, a nearly 25% drop in overall sales broke down into almost 60 percent less spending on meals, 34% on motor vehicles, and about 14% on everything else.

"Being down only minus-14% was actually good news in my mind because people were quarantined, stores closed, yet significant spending still occurred," Hurst said. "Of course that spending was primarily going to out of state sellers over the Internet. So the key is to get those sales back to Massachusetts sellers in the weeks to come."