U.S. retail sales surged in May as households boosted purchases of automobiles and a range of other goods even as they paid a bit more for gasoline, the latest sign economic growth is finally gathering steam.
While other data on Thursday showed a slight increase in new applications for unemployment benefits, the number remained in territory associated with a tightening labor market. The signs of a firming economy could likely prompt the Federal Reserve to raise interest rates in September.
Retail sales increased 1.2 percent last month after an upwardly revised 0.2 percent gain in April, the Commerce Department said. April sales were previously reported to have been unchanged. March sales were also revised to show them rising 1.5 percent instead of 1.1 percent.
The dollar rallied against a basket of currencies on the retail sales data, while prices for U.S. Treasury debt fell. U.S. stock index futures were little changed.
The U.S. central bank has kept its short-term interest rate near zero since December 2008. Solid retail sales data added to robust job growth in May and stabilizing manufacturing activity in suggesting the economy was finding momentum after getting off to a slow start in the second quarter.
The government’s most recent growth estimate showed gross domestic product contracted at a 0.7 percent annual pace in the first quarter.