US retail sales climb 1.2%
Consumer spending jumps 2% as strong growth in jobs market boosts sentiment
washington — 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 per cent in May, following a 0.2 per cent gain in April, the Commerce Department said on Thursday. Sales have risen 2.7 per cent 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. Employers have added more than three million jobs over the past year, but until last month many workers appeared to be saving as much of their paychecks as they could.
Consumers upped their spending by more than two per cent 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 per cent year-to-date, according to the government.
More Americans are also upgrading their wardrobes. Thursday’s report showed that shopping at clothiers also rose 1.5 per cent last month.
Sales at gasoline stations increased 3.7 per cent, largely reflecting the higher costs of gas since April. Prices at the pump rose by roughly 14 cents a gallon last month to $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 per cent. But over the past year, restaurant and bar receipts have surged 8.2 per cent.
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 per cent of the economy. Yet retail sales account for only about one-third of spending, with services
such as haircuts and Internet access making up the other twothirds.
Job gains over the past year have
driven down the unemployment rate to 5.5 per cent from 6.3 per cent in May 2014. Still, many Americans were hesitant to spend as their incomes were barely rising above inflation. Average hourly earnings grew 2.3 per cent over the past 12 months, a pace that has recently accelerated but remains below the three per cent level typical in a healthy job market.
Broader consumer spending — which includes services — was unchanged in April, the Commerce Department reported separately. On the whole, Americans chose to set aside a larger share of their paychecks. The savings rate reached 5.6 per cent of after-tax incomes, the second highest level since December 2012.
Unemployment benefit
The number of Americans seeking unemployment benefits rose slightly last week, yet remained at a historically low level that points to a healthy job market.
The Labour Department said on Thursday that weekly applications for jobless aid increased 2,000 to a seasonally adjusted 279,000. The four-week average, a less volatile measure, rose 3,750 to 278,750.
Even with the increases, both figures remain at very low levels. The average fell to a 15-year low last month. Applications are a proxy for layoffs, so the figures suggest that few Americans are losing their jobs.