WASHINGTON – U.S. retail sales rose for a fourth straight month in May, adding to evidence that consumer spending will contribute to stronger economic growth.
Consumer spending rose 0.3 percent in May, helped by a surge in demand for autos, the Commerce Department said Thursday. The result follows a 0.5 percent climb in April and a 1.5 percent surge in March, which was the biggest one-month gain in four years.
Retail sales had fallen sharply in January as winter storms cut into shopping and various other types of economic activity. Overall economic growth went into reverse in the first quarter, shrinking at an annual rate of 1 percent. But the revival in consumer spending has led economists to predict a solid rebound to 3 percent growth or better in the current April-June quarter.
For May, auto sales increased 1.4 percent. The rise in auto sales had been expected after dealers reported last week that sales in May jumped to a nine-year high, helped by brisk demand for SUVs and pickup trucks.
Sectors outside of autos didn't fare quite as well. Sales at hardware stores and furniture stores increased, but department store sales fell 1.4 percent. A broader category that includes department stores and big box stores such as Wal-Mart and Target saw sales fall 0.6 percent.
Sales were also down at specialty clothing stores and electronics stores but posted a solid gain of 0.6 percent in the category that includes Internet shopping.
The 0.3 percent rise in May sales was slightly below economists' expectations. But they noted that the April sales figure was revised up from an initial estimate of a smaller 0.1 percent gain.
Paul Dales, senior U.S. economist at Capital Economics, said that the weakness in areas such as department stores and specialty clothing stores was hard to understand, given the rapid rise in employment. Households are also are feeling wealthier with the strong gains in the stock market and in home prices.
"We expect it won't be long before sales start rising more rapidly," Dales said in a research note. "Overall, the fundamentals suggest that the U.S. economy remains healthy."
Many economists are forecasting that overall economic growth will remain at a solid 3 percent level in the second half of the year.
Part of the optimism reflects expectations that employers will keep increasing their hiring, with extra jobs boosting incomes and supporting stronger consumer spending.
The economy added 217,000 jobs in May, the fourth straight month of a gain of more than 200,000, something that hasn't happened since 1999. The unemployment rate remained unchanged in May at 6.3 percent, the lowest in more than five years.