Business

US retail sales hit by weak car market

Car showroom
Image caption Car sales fell at their sharpest rate in more than a year

US retail sales fell in May for the first time in almost a year, due in large part to a sharp drop in car sales, official figures have shown.

Sales fell 0.2% from the month before to $387.1bn ($236.2bn).

Car sales fell 2.9%, partly due to supply issues caused by March's earthquake in Japan.

Despite the fall, analysts said sales were better than expected and highlighted the increased spending against a year earlier.

"Although autos posted their largest decline since February of last year, car sales are still up 5.4% from May 2010," said Vimombi Nshom at IFR Economics.

"Overall, sales are 7.7% higher than total transactions conducted 12 months ago."

Taking car sales out of the equation, retail sales actually rose by 0.3% on the previous month, the Commerce Department figures showed.

Weak recovery

The sales figures were welcomed by the markets, with the main Dow Jones index closing up 123.1 points, or 1.0%, at 12,076.1.

Investors viewed the data as a welcome relief from some poor recent economic statistics.

Last week, the Federal Reserve said growth had appeared to slow in several regions across the US in May.

The manufacturing sector was notably sluggish, the Fed said, due to the disruption to supply chains from Japan's earthquake.

Earlier this month, official data showed that US employment growth slowed sharply in May, with only 54,000 net new jobs added during the month. Markets had expected a rise of 150,000.

The US housing market also remains depressed.

Related Internet links

The BBC is not responsible for the content of external Internet sites