Data shows spending on home products falls in May

AP News
Posted: Jun 01, 2011 7:20 PM
Data shows spending on home products falls in May

Consumers spent less on big-ticket home items such as furniture and appliances in May as the housing market continued to slump, but categories such as clothing and luxury items fared better, according to data released Wednesday by MasterCard Inc.

Figures from MasterCard Advisors' SpendingPulse show spending on furniture fell 3.2 percent during the four weeks that ended May 28, compared with a year earlier. In related categories, spending fell 1.4 percent for home furnishings, 4.4 percent for appliances and 3.6 percent for electronics.

SpendingPulse data includes all forms of payment including cash.

In addition to high gas prices, consumers are facing rising food costs, uncertain prospects for jobs and income and a weak housing market. That has eaten away at consumer confidence, which fell unexpectedly in May, according to data the private group the Conference Board released on Tuesday.

Weak consumer confidence tends to affect sales of durable goods, such as appliances, more than other categories, and that is consistent with MasterCard SpendingPulse's numbers for May, said Michael McNamara, the firm's vice president of research and analysis.

A more detailed picture for the month will emerge Thursday, when selected major retailers plan to report May revenue at their stores open at least a year. Michael Niemira, chief economist for the International Council of Shopping Centers, expects revenue in stores open at least a year to rise about 3 percent overall.

The SpendingPulse data show some sectors performed well in May. Spending on clothing rose 5.9 percent, including a 5 percent increase in women's clothing and a 9.7 percent increase in men's. But McNamara noted the increase in men's clothing spending was compared with a 10.4 percent drop in May 2010 from May 2009. Spending on children's clothing rose 9.9 percent last month, compared with May 2010.

Luxury, a sector that has rebounded more quickly than others, rose 4.7 percent, and jewelry rose 7.6 percent.

"The consumer seems to be somewhat resilient," McNamara said. "The areas of concern are areas of retail related to housing."

Online sales continued their robust growth, rising 15.9 percent in a seventh straight month of double-digit improvement. The national average price for a gallon of gas, which was $3.78 Wednesday, down from $3.98 on May 5, is still $1.05 higher than a year earlier, according to AAA, Wright Express and Oil Price Information Service.

Shoppers going online to avoid spending on gas to drive to a store could have boosted the online results, McNamara said.

One wild card in Thursday's numbers will be the weather, which was unseasonably cool and rainy during much of the month, with flooding along the Ohio and Mississippi Rivers and 350 tornadoes reported during the month. This year included the coolest run-up week to Mother's Day since 2005, according to weather research firm Planalytics.

The weather, coupled with high gas and food prices and rising clothing costs, likely "tempered sales" in May, said Ken Perkins, president of the RetailMetrics LLC research firm.

Perkins expects the overall rise in revenue in stores open at least a year will be 5.1 percent.