Thank goodness for some sunshine! US consumers dusted off their pocket books in May and returned to spending while word is the economy is …
Thank goodness for some sunshine! US consumers dusted off their pocket books in May and returned to spending while word is the economy is set to expand in Q2.
US retail sales rose a seasonally adjusted 1.2% month-on-month in May to $444.9bn, following a slender 0.2% gain in April, as consumer spending rebounded. Analysts, however, had expected a 1.3% gain last month.
OK, May’s gain may have mostly been about strong auto sales, up 2%, and fuel, up 3.7%. But the overall rise was underpinned by a 1.5% hike in clothing sales while online sales also climbed 1.4%, the Commerce Department reported Thursday.
The trends are generally upwards. Sales growth excluding autos and gasoline was 0.7% in the month and over the past 12 months, sales have risen a solid 2.7%.
Just as important, the Commerce Department also revised upward the figures for the previous two months, suggesting US consumers are loosening their purse strings more than had been believed after months of cautious spending. Analysts cited strong jobs growth for boosting store sales.
Retail sales were also revised upwards to 1.5% in March, the strongest gain in five years, meaning three consecutive monthly improvements have helped offset declines in the December-February period.
BNP Paribas economist Laura Rosner told the Wall Street Journal the latest report “breaks a string of disappointments to consumer spending data… We continue to expect robust consumption growth for the remainder of the year.”
* The US economy is projected to expand by 1.9% in Q2, according to the Atlanta Federal Reserve’s GDPNow forecast model. The model’s data caught traders’ attention earlier this year with its close reading of the government’s Q1 GDP figures , which showed a 0.2% rise. The GDPNow programme called for a 0.1% increase, compared with a 1% gain among analysts.