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Bonds News

Online, luxury strong, but apparel off in May-report

* US apparel retail sales down 3.7 percent; pricing up

* eCommerce, luxury, jewelry up, electronics sagged

* Consumers seem to be taking a pause

DETROIT, June 3 (Reuters) - Luxury items, jewelry and products sold online were the fastest-growing U.S. sales categories in the retail sector in May, but weakness in apparel and electronics suggest consumers may still be wary in their spending, according to a report released on Thursday.

“Overall the environment in May has been relatively soft,” said Mike Berry, director of industry research for MasterCard Advisors SpendingPulse, which estimates total retail sales across all payment forms. “It looks like the consumer is taking a pause.”

While e-commerce, luxury, jewelry and restaurants saw May sales rise 13.7 percent, 9.7 percent, 6.4 percent and 2.8 percent, respectively, demand for clothing, electronics and appliances was not so rosy, according to the SpendingPulse report.

Apparel saw sales down 3.7 percent after a 1.4 percent decline in April. Demand was weakest in men’s (down 10.4 percent), women’s (down 6.1 percent) and footwear (down 7.3 percent), SpendingPulse said. Family apparel, for teenagers and young adults, saw sales decline 0.3 percent

Children’s apparel was the only segment showing a gain at 2.4 percent. Another positive sign was a 5.4 percent increase in the overall apparel pricing index, which represents the average ticket size. That suggests less discounting and inventories that are better aligned with demand, Berry said.

Electronics and appliances fell 0.7 percent, after three straight months of gains, including 3.8 percent in April. SpendingPulse cited the lack of new products in electronics and the expiration of the Federal Housing Credit at the end of April that hurt demand for appliances.

While some of the declines were due to the later Memorial Day holiday pushing results into June, the results suggest the U.S. retail economy will see some ups and downs over the next several months, Berry said.

“Recoveries don’t always take off like a rocket,” he said in a telephone interview. “Sometimes you see a little bit of choppiness early.”

Analysts, on average, expect May same-store sales to rise 2.6 percent when most retailers report results on Thursday, according to Thomson Reuters data.

Since the 2009 holiday season, when consumers opened their wallets to spend after a long period of austerity brought on by the recession, retailers have been trying to see if the recovery will show consistency.

The strongest sector was eCommerce, which logged its sixth straight month of double-digit gains and 10th consecutive month of gains. Within that, children’s apparel and family apparel showed gains of 30.4 percent and 26.2 percent, respectively.

Luxury sales, which includes sales in restaurants, food stores, department stores and high-end retailers, reported its sixth straight month of growth. However, it was the first time it fell below double digits since January.

While restaurants were up, the gains were strongest in fine dining (up 6 percent) and fast food chains (up 13.7 percent), the gains at the low end suggest consumers still worry about the economy, Berry said. Casual dining chains in the middle saw sales fall 6.1 percent.

The gains in jewelry were driven by the independent jewelers, which saw sales rise 14.6 percent, Berry said. (Reporting by Ben Klayman in Detroit, editing by Leslie Gevirtz)

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