US retail sales rose 0.3 percent in May

MARTIN CRUTSINGER, AP Economics Writer

Consumer spending rose 0.3 percent in May, helped by a surge in demand for autos, the Commerce Department said Thursday. The result follows a 0.5 percent climb in April and a 1.5 percent surge in March, which was the biggest one-month gain in four years.

Retail sales had fallen sharply in January as winter storms cut into shopping and various other types of economic activity. Overall economic growth went into reverse in the first quarter, shrinking at an annual rate of 1 percent. But the revival in consumer spending has led economists to predict a solid rebound to 3 percent growth or better in the current April-June quarter.

For May, auto sales increased 1.4 percent. The rise in auto sales had been expected after dealers reported last week that sales in May jumped to a nine-year high, helped by brisk demand for SUVs and pickup trucks.

Sectors outside of autos didn't fare quite as well. Sales at hardware stores and furniture stores increased, but department store sales fell 1.4 percent. A broader category that includes department stores and big box stores such as Wal-Mart and Target saw sales fall 0.6 percent.

Sales were also down at specialty clothing stores and electronics stores but posted a solid gain of 0.6 percent in the category that includes Internet shopping.

Analysts expect overall economic growth to remain at a solid 3 percent level in the second half of the year.

Part of the optimism reflects expectations that employers will keep increasing their hiring, with extra jobs boosting incomes and supporting stronger consumer spending.

The economy added 217,000 jobs in May, the fourth straight month of a gain of more than 200,000, something that hasn't happened since 1999. The unemployment rate remained unchanged in May at 6.3 percent, the lowest in more than five years.