US sales jump in May as jobs boost spend­ing

The China Post - - FRONT PAGE - BY JOSH BOAK

Amer­i­cans ramped up their spend­ing on au­tos, build­ing ma­te­ri­als and cloth­ing in May, a sign that strong job growth is start­ing to boost re­tail sales.

Re­tail sales climbed a sea­son­ally ad­justed 1.2 per­cent in May, fol­low­ing a 0.2 per­cent gain in April, the U.S. Com­merce Depart­ment said Thurs­day. Sales have risen 2.7 per­cent over the past 12 months.

The up­swing in shop­ping re­flects greater con­fi­dence in an econ­omy still shak­ing off the rav­ages of a re­ces­sion that ended six years ago. U.S. em­ploy­ers have added more than 3 mil­lion jobs over the past year, but un­til last month many work­ers ap­peared to be sav­ing as much of their pay­checks as they could.

U.S. con­sumers upped their spend­ing by more than 2 per­cent last month at auto deal­ers and build­ing ma­te­ri­als stores, ev­i­dence that they’re mak­ing longer-term in­vest­ments in their daily com­mutes and homes.

The fig­ures con­firm the strength seen in sep­a­rate re­ports on au­tos and hous­ing. Peo­ple bought cars and trucks last month at an an­nual pace of 17.8 mil­lion, the fastest rate since July 2005, ac­cord­ing to in­dus­try an­a­lyst Au­to­data Corp. The num­ber of newly built homes be­ing pur­chased has surged nearly 24 per­cent yearto-date, ac­cord­ing to the gov­ern­ment.

More Amer­i­cans are also up­grad­ing their wardrobes. Thurs­day’s re­port showed that shop­ping at cloth­iers also rose 1.5 per­cent last month.

Sales at gaso­line sta­tions in­creased 3.7 per­cent, largely re­flect­ing the higher costs of gas since April. Prices at the pump rose by roughly 14 U.S. cents a gal­lon last month to US$2.74 dur­ing Me­mo­rial Day week­end, ac­cord­ing to AAA’s Daily Fuel Gauge Re­port.

Ad­di­tional spend­ing at restau­rants was sub­dued last month, inch­ing up just 0.1 per­cent. But over the past year, restau­rant and bar re­ceipts have surged 8.2 per­cent.

Econ­o­mists watch the re­tail sales re­port closely be­cause it pro­vides the first in­di­ca­tion each month of the will­ing­ness of Amer­i­cans to spend. Con­sumer spend­ing drives 70 per­cent of the U.S. econ­omy. Yet re­tail sales ac­count for only about one-third of spend­ing, with ser­vices such as hair­cuts and In­ter­net ac­cess mak­ing up the other two-thirds.

Job gains over the past year have driven down the U.S. un­em­ploy­ment rate to 5.5 per­cent from 6.3 per­cent in May 2014. Still, many Amer­i­cans were hes­i­tant to spend as their in­comes were barely ris­ing above in­fla­tion. Av­er­age hourly earn­ings grew 2.3 per­cent over the past 12 months, a pace that has re­cently ac­cel­er­ated but re­mains be­low the 3 per­cent level typ­i­cal in a healthy job mar­ket.

Broader con­sumer spend­ing — which in­cludes ser­vices — was un­changed in April, the U.S. Com­merce Depart­ment re­ported separately. On the whole, Amer­i­cans chose to set aside a larger share of their pay­checks. The sav­ings rate reached 5.6 per­cent of af­ter-tax in­comes, the sec­ond high­est level since De­cem­ber 2012.

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