RE­TAIL SALES RISE 1.2% IN MAY

Los Angeles Times - - BUSINESS - By Shan Li

Re­tail sales climbed in May as shop­pers opened their wal­lets a lit­tle wider at stores and restau­rants, sig­nal­ing a stronger eco­nomic re­bound.

Econ­o­mists said the sales boost ref lected im­prove­ments in wages and other ar­eas that left con­sumers feel­ing more f lush. Ris­ing home prices and a ro­bust stock mar­ket have pushed the net worth of Amer­i­can house­holds to a high in the first three months of the year, the Fed­eral Re­serve said Thurs­day.

“Con­sumers are spend­ing a lit­tle more freely now that win­ter is firmly be­hind us,” said Scott Hoyt, se­nior direc­tor of con­sumer eco­nomics at Moody’s An­a­lyt­ics.

“Job gains re­main suf­fi­cient to tighten la­bor mar­kets,” he said, while “hous­ing mar­kets will keep im­prov­ing as well, as ris­ing house prices lift wealth and con­struc­tion.”

Re­tail sales jumped 1.2% last month from April, the Com­merce Depart­ment said Thurs­day. Strip­ping out the volatile cat­e­gory of mo­tor ve­hi­cles and parts, re­tail sales rose a healthy 1%. April sales, ini­tially re­ported as f lat, were re­vised up­ward to 0.2%.

At the Glen­dale Gal­le­ria on Thurs­day, Arev Tatar­ian, 19, said she re­cently landed a bet­ter-pay­ing job as a cos­met­ics sales­woman and was now treat­ing her­self to things that she wanted.

“I got a new phone, I just bought a car,” the Glen­dale res­i­dent said. “I’m not count­ing the dol­lars any­more.”

But an­a­lysts are split about how ea­ger shop­pers are to spend, even as they en­joy sav­ings at the pump.

In ear­lier months, many con­sumers squir­reled away that ex­tra gas money in­stead of in­dulging in shop­ping trips. Amer­i­can driv­ers have been sav­ing al­most $12 bil­lion a month from lower gas prices, said Craig John­son, pres­i­dent of Cus­tomer Growth Part­ners. But only about $5 bil­lion a month has been plowed back into the econ­omy at re­tail­ers.

“Peo­ple are spend­ing a lit­tle more than they did last year,” said Hakon Helge­sen, an an­a­lyst at re­tail re­search firm Con­lu­mino. But “they are cer­tainly not splurg­ing.”

Con­sumer spend­ing makes up more than twothirds of eco­nomic ac­tiv­ity, mak­ing re­tail sales a strong gauge of the na­tion’s eco­nomic health.

In May, av­er­age hourly wages climbed 3 cents to $24.87; com­pared with a year ago, wages are up 2.3%.

Strong job gains last month soothed wor­ries that the U.S. econ­omy would con­tinue sput­ter­ing af­ter a harsh win­ter damped busi­ness ac­tiv­ity and cur­tailed peo­ple’s urge to shop.

May’s pay­roll in­creases in­di­cated that the econ­omy is on the path of solid growth for the rest of the year, econ­o­mists said. Many an­a­lysts have pre­dicted that the Fed­eral Re­serve will im­ple­ment its first rate hike in al­most a decade at its meet­ing in Septem­ber.

The U.S. econ­omy “has the wind in its sails at the mo­ment,” said Mike Jake­man, global an­a­lyst for the Eco­nomic In­tel­li­gence Unit. “It sug­gests that growth in the sec­ond quar­ter will snap back sharply from the con­trac­tion seen” in the first quar­ter of 2015.

The en­cour­ag­ing re­tail sales re­port helped lift U.S. stocks for a sec­ond day on Thurs­day. The Dow Jones industrial av­er­age in­creased 0.2% to 18,039.37.

Eleven of the Com­merce Depart­ment’s 13 cat­e­gories re­ported growth in May.

Build­ing ma­te­rial and gar­den sup­pli­ers, boosted by warm weather, said sales rose 2.1%. Sales for fur­ni­ture re­tail­ers climbed 0.8%. Gaso­line sta­tions in­creased 3.7%, re­flect­ing an over­all in- crease of prices at the pump.

De­spite en­cour­ag­ing signs of growth, not all shop­pers were ready to go on spend­ing sprees.

Terri Wash­ing­ton, 39, said she was cut­ting back on buy­ing un­nec­es­sary items. She said food prices are go­ing up, and her util­ity bill is higher as well. The West Los An­ge­les hair­styl­ist said her clients are also stretch­ing out the time be­tween hair ap­point­ments in or­der to sock more into sav­ings.

“They’re not com­ing ev­ery sin­gle week for a sham­poo,” she said. “They’re do­ing it at home.”

Katie Falken­berg Los An­ge­les Times

“PEO­PLE ARE SPEND­ING a lit­tle more than they did last year,” said Hakon Helge­sen, an an­a­lyst at re­tail re­search firm Con­lu­mino. But “they are cer­tainly not splurg­ing.” Above, din­ers at a restau­rant in Cul­ver City.

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