Official figures show that US retail sales grew more than expected in May.
US Department of Commerce reported a rise in sales by 1.3% in April, with a growth of 0.5% by the end of May. It was marked by a consecutive increase in online, clothing, sporting and car sales.
In spite of the economists’ projected decline in sales by May, April emerged as the strongest gainer since March 2015.
A surge in car sales by 0.5% and a subsequent rise in fuel spending at filling stations by 2.1% led to consecutive rise in oil prices. Clothing stores followed the same trend with sales increasing by 0.8%, the largest increase since November 2015.
Online retail sales, sporting goods, and hobby stores also witnessed a rise by 1.3% each. The core retail sales grew by 0.4 %. This was greater than the economists’ projected growth of 0.3%. However, sales of building materials and garden equipment declined by 0.2% in May from 2% in April.
The chief executive of Retail Analysts Conlumino, Neil Saunders noted that people seemed more financially confident but spent less on big-ticket items like cars as opposed to other sectors due to uncertainties about the future. He also pointed out that May was a good month for the retail sector although the numbers hint at households remaining vigilant about spending.
The consumer polls by Analysts Conlumino suggested a rise in concerns over an increase in future interest rates. This, along with households being vigilant when spending, are warning signs for a decline in growth in the retail sector particularly if a rise in the rate were to be implemented. However, this lacks a direct impact on the consumer spending decisions.
On Tuesday, the Federal Research will initiate its latest policy meeting, with an announcement expected on Wednesday. Some analysts anticipate a rise in interest rates by the Federal Research during the Tuesday Meeting. This is supposed to happen at a crucial time in May when Job creation declined to the lowest since 2010. In fact, employers only posted 38000 jobs in May, the lowest since September 2010.
The retail sales figures are a key determinant of consumer expenditure in the US.