Consumers wasting little time as lockdowns ease

The 17.7% m/m jump in retail sales in May showed that consumer spending is recovering far quicker than most had expected as lockdowns have eased, with headline retail sales reversing their April drop and underlying control group sales back at pre-pandemic levels. With many states only lifting restrictions part way through last month, sales should see another solid rise in June. Admittedly, not all of the recent data have been so positive, with manufacturing output rebounding by only 3.8% last month and the jobless claims figures suggesting that unemployment remains high. Nevertheless, the retail sales data suggest that real consumption and GDP didn’t fare quite as badly in the second quarter as we had initially anticipated, falling by about 30% annualised. Moreover, even pencilling in much more modest gains over the coming months, GDP could now be set for a similar-sized rebound in the third quarter.