Business

US consumer data for May give mixed signals for economy

Shoppers in Manhattan
Image caption The poor US sales data follows equally weak jobs numbers for May.

A surprise drop in US retail sales in May was followed by a jump in June consumer confidence.

Sales were down 1.2% compared with April - the first drop in eight months. Economists had expected a 0.4% rise.

But a consumer confidence index rose to 75.5 in June versus an expected 74.5.

The two data releases came in quick succession, and puzzled stock markets, which fell on the sales data, then bounced right back after the consumer report was announced.

The Dow Jones Index had opened 0.8% down, and European markets giving up gains from a morning rally, after the retail sales data were announced by the Commerce Department.

But shortly after New York trading opened, Reuters and the University of Michigan produced their latest consumer confidence report, showing the highest level since 2008.

Recovery fears

Despite the monthly fall in retail sales in the Commerce Department data, total sales in May were still 6.9% higher than the recession lows of a year ago. However they remain well down on pre-recession levels.

Car and gasoline sales led the monthly falls, down 1.7% and 3.3% respectively, although the lower value of gasoline sales was largely explained by lower fuel prices.

Consumer spending contributes 70% of demand in the US economy, making it a key driver of growth.

The news comes in the wake of weak US jobs data for May released last Friday.

Markets fear that with US households still heavily indebted, the recovery in consumer spending may prove to be anaemic.

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