The retail sales report will provide the first read on consumer spending patterns in May, a month shaped by persistent cost-of-living pressures, volatile petrol prices, and uncertainty around trade policy. April’s advance estimate showed a broadly resilient consumer: headline retail sales rose 0.5% month on month to $757.1bn, up 4.9% from April 2025, led by a 2.8% jump in gasoline sales. The May reading will show whether that momentum held, softened, or whether gasoline’s contribution reverses on lower pump prices.

What the Advance Retail Sales Report Measures

The Advance Monthly Retail Trade Survey (MARTS) is conducted by the Census Bureau and covers approximately 4,800 retail and food services firms. It produces an early estimate of total retail and food services sales, published roughly two to three weeks after the reference month ends, making it one of the most timely high-frequency indicators of consumer spending.

The headline figure is total retail and food services sales in dollar terms, expressed as a month-on-month percentage change. Alongside the headline, analysts focus on several sub-components. Retail trade sales (excluding food services) provide a read on goods consumption. Core retail sales, which exclude food services, motor vehicle dealers, building materials and gasoline stations, are often called the “control group” and feed most directly into the Bureau of Economic Analysis’s calculation of personal consumption expenditures (PCE), the Fed’s preferred inflation and spending gauge. A strong control group reading implies robust real consumer demand; a weak reading raises questions about the durability of growth.

April 2026: Consumer Spending Held Up

April’s advance report, published on 14 May 2026, showed headline retail sales of $757.1bn, a 0.5% monthly gain that was broadly in line with market expectations. On a year-over-year basis, sales were 4.9% higher than April 2025. The three-month average covering February through April 2026 was 4.4% above the same period a year earlier, suggesting a sustained if not spectacular pace of consumer spending.

Petrol station sales provided the largest positive contribution in April, rising 2.8% on the month. This reflected higher fuel prices in April rather than increased consumption volumes, meaning the headline gain was partially an inflationary pass-through rather than an indicator of rising real demand. Stripping out this effect is important for interpreting the underlying trend.

Non-store retailers, predominantly e-commerce and direct-to-consumer platforms, were the standout performer on an annual basis, up 11.1% from April 2025. Food services and drinking places rose 2.7% year on year, pointing to continued consumer willingness to spend on out-of-home dining. The control group reading, which excludes auto, gas, food services, and building materials, rose 0.5% month on month, slightly above expectations of 0.4%, and followed a 0.8% gain in March. This back-to-back strength in the control group was one of the more encouraging signals in April’s report.

Not all categories fared well. Department stores fell 3.2%, clothing retailers dropped 1.5%, furniture stores declined 2.0%, and motor vehicle dealers saw a modest 0.5% decline. These segments reflect ongoing challenges in discretionary goods, where consumers have shown greater caution amid elevated prices and economic uncertainty.

What to Watch in the May 2026 Release

Petrol station sales reversal. Petrol prices in May were generally lower than April, with crude oil trading in a softer range. If this translates into a meaningful decline in petrol station sales, the headline retail figure could be dragged lower even if underlying goods consumption remains steady. A flat or negative headline driven by this single category should not be read as a sign of broader consumer weakness.

Control group performance. After two consecutive months of solid growth in the control group (0.8% in March, 0.5% in April), markets will be watching whether this measure maintains momentum. Control group strength is the most important signal for PCE forecasts and therefore for Fed policy. Any moderation would soften expectations for Q2 consumer spending; another gain above 0.4% would be a positive surprise.

Motor vehicle sales. Auto dealership receipts are volatile and heavily influenced by inventory availability and financing conditions. Tariff effects on vehicle prices in 2026 have been a recurring headwind. A significant swing in auto sales could distort the headline figure in either direction.

Non-store retailers. The continued double-digit annual growth in e-commerce and direct-to-consumer platforms has been a consistent feature of 2025-2026 retail data. Whether this category maintained its outperformance in May or showed signs of normalisation will matter for understanding the structural shift in retail channels.

Food services. Restaurant and bar spending is considered a leading indicator of consumer confidence. Year-on-year growth of 2.7% in April was below the headline retail rate, suggesting some softening in out-of-home dining relative to goods spending. If this gap widens in May, it could echo the weakness being captured in the University of Michigan sentiment readings.

The FOMC Coincidence

17 June 2026 is the most data-heavy single day of the month. The retail sales report drops at 8:30 AM ET, before equity markets open. The Federal Reserve’s Open Market Committee will then announce its rate decision in the afternoon, with the press conference and updated Summary of Economic Projections following at 2:30 PM ET. Between these two events, markets will also receive the final PPI revision and any pre-market earnings announcements.

The practical implication is that the retail sales reading will set the morning tone but will be rapidly incorporated into the Fed’s backdrop narrative before the rate decision. A stronger-than-expected retail figure, one that suggests consumer spending remained robust in May despite record-low sentiment readings, would add to the “higher for longer” rate case, reinforcing the Fed’s stated reluctance to cut while consumption remains firm. A notably weak reading would complicate that narrative, pointing to a cooling consumer that might eventually justify rate cuts.

The contrast between May’s record-low University of Michigan Consumer Sentiment reading of 44.8 and consistently solid retail sales data has been one of the defining puzzles of the 2026 economic picture. Sentiment and spending have diverged sharply: Americans say they feel terrible about the economy, but they continue to spend. May retail data will offer the latest instalment in that divergence or its potential resolution.

Consumer Spending in the Broader 2026 Context

Retail sales have held up better than many analysts expected given the cumulative weight of high prices, rising insurance costs, and declining real purchasing power for lower-income households. Several factors have sustained aggregate spending: a resilient labour market with unemployment below 4.5%, nominal wage growth still running above 3.5%, and pandemic-era savings buffers that have eroded but not fully depleted for middle and upper-income households.

The risk going into the second half of 2026 is that these supports are weakening simultaneously. Savings buffers are thinner, credit card delinquency rates have been rising, and the University of Michigan’s survey suggests a psychological deterioration that historically precedes spending adjustments. Whether May’s retail data shows the first signs of a broader consumer pullback or another month of resilience will be closely scrutinised.

For the complete picture of June 17, see our preview of the FOMC Rate Decision June 2026. For context on inflation data that feeds into the same policy meeting, see the US Consumer Price Index June 2026 and the US Producer Price Index June 2026.

Featured image: Photo by You Le on Unsplash.