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In this June 5, 2014 photo, Chelsea Vick shops for clothes at Wal-Mart Supercenter in Rogers, Ark. The Commerce Department releases retail sales data for May on Thursday, June 12, 2014. (AP Photo/Sarah Bentham)
U.S. retail sales rose 0.3 percent in May
Economy » Auto purchases led fourth straight month of consumer spending increases.
First Published Jun 12 2014 08:45 am • Last Updated Jun 12 2014 10:15 am

Washington • U.S. retail sales rose modestly in May as consumers turned cautious in their spending. But the weaker-than-expected result is unlikely to derail stronger overall in the second quarter.

Retail sales rose 0.3 percent in May, helped by a jump in demand for autos, the Commerce Department said Thursday. The result follows a 0.5 percent climb in April, which was revised up from an initial estimate of 0.1 percent. March sales surged 1.5 percent — the biggest one-month gain in four years.

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Analysts said any disappointment in May was offset by the change in April’s figure.

"May retail sales fell short of estimates, although upward revisions to April make it about a wash versus consensus forecasts," said Jay Feldman, director of U.S. Economics Research at Credit Suisse.

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. But sectors outside of autos did not fare as well.

Paul Dales, senior U.S. economist at Capital Economics, said that the declines at department stores and appliance 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."

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.


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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.



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