Business

US retail sales in May beat expectations

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US retail sales rose more than expected in May, official figures have shown, helped by an increase in online, clothing and sporting goods sales.

Sales rose by 0.5% last month, after surging by 1.3% in April, according to the US Commerce Department.

April's figure was the strongest gain since March 2015, and a slowdown in May had been expected by economists.

Car sales rose by 0.5% with spending on fuel at service stations up by 2.1%, reflecting the increase in oil prices.

Sales at clothing stores increased by 0.8%, the largest gain since November.

Online retail sales climbed 1.3%, with receipts at sporting goods and hobby stores also up 1.3%.

'Solid report'

When sales of cars, petrol, building materials and food services were stripped out, so-called "core retail sales" rose 0.4%.

The retail sales data is a key gauge of consumer spending in the US.

Analysts had forecast that sales would rise by about 0.3% last month.

Ian Shepherdson, of Pantheon Macroeconomics, said: "This is a solid report. Now the weather has returned to normal with the fading of El Nino and with Easter distortions out of the data, the consumer is back on track."

Sales of building materials and garden equipment remained weak, falling 1.8% after declining 2% in April.

Neil Saunders, chief executive of retail analysts Conlumino, said people appeared to be more confident about their financial positions, but were tending to spend less on big ticket items such as cars compared with other sectors because of fears about the future.

"Overall, May was not a bad month for retail but the numbers contain warning signs that households are still cautious about spending," he said.

"There are also, we have noted from our own consumer polling, rising concerns over future interest rate increases.

"This is not yet having a tangible impact on spending decisions, but if implemented a rate rise could well act as a further brake on retail growth," Mr Saunders added.

The Federal Reserve begins its latest policy meeting on Tuesday, with an announcement due on Wednesday.

Few analysts are expecting the Fed to raise interest rates at the meeting, after job creation in May fell to its lowest level in more than five years.

Employers added just 38,000 jobs last month, the fewest since September 2010.

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