E-Commerce sales continued to grow in May despite a broader decline in consumer spending, signaling a growing shift toward online shopping as households respond to economic uncertainty.

Retail Sales Slip, But E-Commerce Sales Grow

Consumer spending fell sharply in May, marking a 0.9% month-over-month decline in retail sales, according to new federal data. This comes after a slight dip of 0.1% in April and follows a strong first-quarter surge. Year-over-year, retail sales are up 3.3%, the smallest annual gain in seven months.

Despite this slowdown, one sector continues to show resilience: E-Commerce. Online and nonstore retailers reported a 0.9% increase in sales in May, marking the fourth consecutive month of gains. This suggests that while shoppers may be cutting back in some areas, digital spending habits remain strong.

Shift Toward Online and Essential Goods

Not all segments of the retail economy fared equally. Sales at auto dealerships dropped 3.5% from the previous month, while building materials and garden supply outlets saw a 2.7% decline. Spending at bars and restaurants also dipped by 0.9%, a notable drop after leading growth in April.

Analysts point to a potential shift in consumer priorities. With inflation and interest rates weighing on household budgets, shoppers are likely turning to online platforms for better deals and convenience. Digital retail channels offer a flexible alternative as families rebalance their spending between necessities and discretionary goods.

Economic Outlook Remains Cautious

Although a recent trade truce with China helped reduce tariff-related concerns, broader geopolitical uncertainties continue to cloud consumer and business confidence. Analysts warn that this could lead to slower economic momentum in the second half of 2025.

Still, the continued growth in E-Commerce sales offers a rare bright spot and could signal an ongoing transformation in how Americans shop. The strength of digital sales may help offset weaknesses in other categories if online retailers maintain competitive pricing and reliable service.

As retail trends shift, the continued strength of E-Commerce highlights how consumer behavior is evolving in response to economic pressures. Businesses that adapt to digital platforms and meet customers where they are—online—may be better positioned to weather future slowdowns and capitalize on changing market dynamics. For more information on the latest retail data, visit the U.S. Census Bureau’s Monthly Retail Trade Report