Domestic consumption is the dominant term in the US economy, accounting for 70% of US output and consumer sales is an important element within the sector. Data for US retail sales gained 1.3% in April, its best performance for 13 months, so it had been anticipated that the May figure would be relatively subdued. In the event, retail sales for May managed to grow by 0.5% which represents a stronger performance than the level anticipated by analysts.
The May data was bolstered by increases in spending on clothes and sporting goods and more purchases were made online too, according to US Commerce Department figures.
The rally in oil prices in recent weeks has been reflected in higher forecourt prices for fuel, pushing spending on fuel up by 2.1%. On the subject of automobiles, care sales managed a 0.5% increase in sales during May.
Detailed analysis shows that spending on sports goods and in leisure (hobby) stores increased by 1.3%, a level of increase also seen in online purchases. The increase in sales in clothing shops was the best performance seen since November of last year, coming in at a 0.8% rise.
The core retail sales figure had been expected to come in at 0.3% whereas an increase of 0.4% was seen. The core data strips out spending on certain items such as building supplies, fuel, car sales and food services. However, sales of building supplies and garden equipment have been weak, declining by 2% in April and a further 1.8% last month.
The data will support those who believe that interest rates will increase in the early part of the summer. The increase in job creation was very disappointing last month (and was the weakest job creation figure since September 2010) and with substantial uncertainty over the outcome of the UK EU referendum, it must be more probable that a decision by the Fed to raise rates will be deferred to July.