Auto dealers drive May retail sales up past expectations
Retail sales improved in May as thawing temperatures and more cheerful shoppers caused a boost at car dealerships and home improvement stores, according to government figures.
Last month, the gauge rose 0.6% from April to $421.1 billion in sales -- a 4.3% increase from the same period a year earlier, the Commerce Department said.
Wall Street had expected a 0.4% month-to-month swell. In April, sales had increased 0.1% from March and 3.7% from the prior year.
The data, which the government adjusted for seasonal and holiday variations, showed a 1.8% month-to-month surge in auto sales. It was the largest upswing since November.
Economists said promising employment numbers along with stock market strength and rising home prices may have encouraged more consumer confidence in May.
Consumers in the grip of spring fever also rushed out to stores offering building materials and garden equipment and supplies, pushing sales up 0.9%. Online sales got a 0.7% boost.
A core measure of sales with autos and gas stripped out advanced 0.3% last month.
“In spite on fluctuating gas prices, severe weather in much of the country and fiscal policy uncertainty, consumers continue to demonstrate an inherent resiliency and flexibility,” said Matthew Shay, chief executive of the National Retail Federation trade group, in a statement.
But analysts at Credit Suisse said May retail sales were “good, not great.”
“We think consumer spending has room to improve as the year progresses, given solid gains in real income, household net worth, and consumer sentiment,” they wrote in a note to clients Thursday.
During May, sales of furniture and home furnishings slipped 0.8% while sales at clothing stores sank 0.2%. Electronics and appliance merchants fared no better, weathering a 0.4% dip. Restaurants also reported a 0.4% slide.
“The economy is improving, albeit slowly, but we still have a long way to go,” said Jack Kleinhenz, chief economist of the retailer’s trade group, in a statement.
“Stagnant salaries continue to constrain further economic acceleration,” he said. “While sequester and tax increases dampened sales growth in the first quarter, it appears that the economy absorbed most of the blow.”
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