U.S. retail sales rose in May by the most in six months, exceeding forecasts and boosting expectations for an acceleration in economic growth this quarter.
The value of overall sales advanced 0.8 percent from the previous month, double the median estimate of economists and following an upwardly revised 0.4 percent gain in April, according to Commerce Department figures on Thursday.
So-called retail control-group sales — a key measure that excludes food services, auto dealers, building-materials stores and gasoline stations — rose 0.5 percent, also exceeding projections.
The results added to signs that lower taxes, elevated confidence and a strong labor market are helping to cushion the blow to Americans’ wallets from higher fuel expenses.
Solid gains in household purchases — the biggest part of the economy — and steady business investment are among reasons growth is projected to regain momentum in the second quarter.
“This suggests a pretty strong rebound in second-quarter growth,” said Joseph Song, senior U.S. economist at Bank of America.
“Retail sales were pretty strong across the board,” he said, adding that “we’re relatively optimistic that this could continue going forward. Consumers will be able to absorb higher gasoline costs, especially with the tax cuts kicking in.”
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A separate report from the Labor Department on Thursday showed filings for unemployment benefits fell by 4,000 to a five-week low of 218,000 last week, adding to signs of a tight job market.
Continuing claims for two weeks ago dropped to 1.7 million, the lowest since December 1973.