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 per cent in May, helped by a surge in demand for autos, the Commerce Department said Thursday. The result follows a 0.5 per cent climb in April and a 1.5 per cent 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 per cent. But the revival in consumer spending has led economists to predict a solid rebound to 3 per cent growth or better in the current April-June quarter.
For May, auto sales increased 1.4 per cent. 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 per cent. A broader category that includes department stores and big box stores such as Wal-Mart and Target saw sales fall 0.6 per cent.
Sales were also down at specialty clothing stores and electronics stores but posted a solid gain of 0.6 per cent in the category that includes Internet shopping.
Analysts expect overall economic growth to remain at a solid 3 per cent 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 per cent, the lowest in more than five years.