Retail Saes in the U.S. rose more than forecast in May, showing job gains and lower borrowing costs are encouraging consumers to spend.
The 0.6 percent increase was the biggest in three months and followed a 0.1 percent gain in April, Commerce Department figures showed today in Washington. The median forecast of 83 economists surveyed by Bloomberg called for a 0.4 percent advance. The figures used to calculate economic growth, which exclude categories such as automobiles, climbed 0.3 percent.
Interest rates held down by the Federal Reserve’s record monetary stimulus are bolstering car sales in the face of higher taxes and limited income growth. Higher stock and home prices are shoring up confidence, driving orders at retailers such as Gap Inc. (GPS) and underpinning the household purchases that account for about 70 percent of the economy.
“The consumer seems to be faring very well,” said Brian Jones, senior U.S. economist in New York at Societe Generale, who correctly forecast the gain in sales. “The labor market is getting better. People realize that the employment situation has improved so they feel better and are probably willing to go out and spend money.”
Stock-index futures held earlier losses after the report and another that showed fewer Americans than forecast filed for unemployment benefits last week. The contract on the Standard & Poor’s 500 Index expiring this month dropped 0.2 percent to 1,606.9 at 8:45 a.m. in New York.