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In an unanticipated turn of events, retail sales in the United States saw a 0.3% rise month-on-month in May 2023. This comes after a 0.4% surge in April and outperforms market predictions of a 0.1% downturn, per tradingeconomics. As for core retail sales, which exclude car sales, gasoline, building materials, and food services, they saw a 0.2% rise, succeeding a 0.6% increase in April.
The statistics imply that consumer spending stays robust, undeterred by the increase in inflation and interest rates. The most substantial growth was observed in the sale of building materials and garden equipment (2.2%), along with motor vehicles and parts (1.4%).
There was also an increase in expenditure at food services and drinking establishments, general merchandise stores, furniture outlets, food and beverages shops, and retailers specializing in sporting goods, hobby materials, musical instruments, & books – all recording a 0.4% growth. Meanwhile, electronic and appliances stores witnessed a 0.2% increment.
Conversely, sales at health and personal care outlets, as well as clothing stores, remained stagnant. There was a significant drop of 2.6% at gasoline stations and a 1% decrease at miscellaneous store retailers.
Below we highlight a few areas and the related ETFs that may benefit handsomely.
Winning Areas
Building Material & Garden Equipment & Supplies Dealers
The segment Building Material & Garden Equipment & Supplies Dealers saw a 2.2% sequential gain in sales. However, the segment’s sales were 0.9% higher year over year.
As far as the ETF is concerned, broad-based retail ETFs like Consumer Discretionary Select Sector SPDR ETF XLY and VanEck Retail ETF RTH should fit the bill.
Zacks Rank #1 (Strong Buy) Owens Corning OC is a world leader in building materials systems and composite solutions.
Motor Vehicle & Parts Dealers
Sales of this category gained 1.4% sequentially in January and up 4.4% year over year.
First Trust S-Network Future Vehicles & Technology ETF (CARZ) follows the S-Network Electric & Future Vehicle Ecosystem Index constituents are chosen by selecting the eligible Pure-Play companies in descending order of float-adjusted market capitalization until 100 constituents have been selected.
Group 1 Automotive Inc. GPI is one of the leading automotive retailers in the world, with operations primarily located in the United States and the UK. The stock has a Zacks Rank #3 (Hold).
Sporting Goods, Hobby, Musical Instrument, & Book Stores
Sporting goods, hobby, musical instrument, & book stores sales gained 0.3% sequentially in May and 1.2% year over year.