U.S. retail sales rose less than expected in May and first-time applications for unemployment benefits increased last week, but did little to change views that the economy is regaining steam.
Thursday’s reports came on the heels of recent data showing solid job growth in May and strong expansion in manufacturing and services industries.
The Commerce Department said retail sales gained 0.3 per cent last month. While that was below economists’ expectations for a 0.6 per cent rise, April’s retail sales were revised to show a 0.5 per cent increase.
Retail sales, which account for a third of consumer spending, had previously been reported to have edged up 0.1 per cent in April.
“The continued gains during the first two months of the second quarter suggests that consumers are continuing to hold their side of the bargain, building on the strong momentum at the end of the last quarter,” said Millan Mulraine, deputy chief economist at TD Securities in New York.
In a separate report, the Labor Department said initial claims for state unemployment benefits climbed 4,000 to a seasonally adjusted 317,000 for the week ended June 7.
U.S. stocks opened lower. U.S. Treasury debt prices rose, while the dollar slipped against a basket of currencies.
The economy added 217,000 jobs in May, the fourth straight month of job gains above 200,000, and has recouped all the 8.7 million jobs lost during the recession. The unemployment rate held steady at a 5-1/2 year low of 6.3 per cent.
Economic growth in the second quarter is expected to top a 3.0 per cent annual pace after the economy contracted at a 1.0 per cent rate in the January-March period.
The lofty growth forecasts were supported by a second report from the Commerce Department showing business inventories recorded their biggest increase in six months in April.
So-called core retail sales, which strip out automobiles, gasoline, building materials and food services, and correspond most closely with the consumer spending component of gross domestic product, were unchanged last month.
However, they were revised to show a 0.2 per cent rise in April, instead of the previously reported 0.1 per cent dip. Economists said retail sales were up at a 9.2 per cent annualized pace over the last three months.
“This points to ongoing solid momentum in personal spending in the second quarter, which we currently peg at a rate around 3.25 per cent,” said Anthony Karydakis, chief economic strategist at Miller, Tabak in New York.
In May, consumers bought automobiles, boosting receipts at auto dealerships 1.4 per cent. Excluding autos, retail sales rose 0.1 per cent in May.
There were solid gains in sales at building materials and garden equipment stores, as well as receipts at non-store retailers, which include online sales. Sales at furniture stores also rose.
However, there were marginal declines in sales at sporting goods shops, electronics and appliances stores, as well as at clothing retailers and restaurants and bars.
Another report from the Labor Department showed little signs of imported inflation, with import prices edging up 0.1 per cent last month. In the 12 months through May, prices increased 0.4 per cent, advancing for the first time since July.
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