WASHINGTON – Americans stepped up purchases at retail businesses in May, spending more on cars, home improvements and sporting goods. The gain shows that consumers remain resilient despite higher taxes and could drive faster growth later this year.
The Commerce Department said Thursday that retail sales increased 0.6 percent in May from April. Thats up from a 0.1 percent gain the previous month and the fastest pace since February.
The April gain was led by a 1.8 percent jump in auto sales, the biggest increase in six months. Excluding volatile autos, gas and building supplies, core retail sales rose 0.3 percent. Thats slightly higher than the 0.2 percent April increase.
Sales increased at hardware and general merchandise stores, but they fell at furniture and appliance stores.
Separately, the Labor Department said the number of Americans seeking unemployment benefits dropped 12,000 last week to a seasonally adjusted 334,000. The decline suggests steady job gains will endure.
The retail sales report is the governments first look each month at consumer spending, which drives 70 percent of economic activity.
Solid job growth and rising home prices have allowed consumers to withstand an increase this year in Social Security taxes, which has lowered take-home pay for most Americans.
Consumer spending from January through March grew at the fastest pace in more than two years. That helped the economy expand at a solid annual rate of 2.4 percent. Most economists predict that growth is slowing in the April-June quarter to an annual rate of 2 percent or less. But many say growth will likely pick up in the second half of the year.