U.S. retail sales jump biggest in 6 months
WASHINGTON–Retail sales in the United States jumped by the largest amount in six months in May as 57 million federal economic-stimulus payments helped offset the headwinds buffeting consumers.
Retail sales soared 1 per cent last month, the biggest increase since November, the commerce department reported yesterday. A wide variety of retailers enjoyed a good month, including the biggest increase at department stores and other general merchandise stores in a year.
The May increase was double what economists had been expecting and indicated the economy is getting a major boost from the government’s $50 billion (U.S.) in economic stimulus payments.
Also, April sales data were revised to show a respectable gain of 0.4 per cent, instead of the original estimate that sales had fallen by 0.2 per cent.
The administration of George W. Bush is hoping the stimulus payments will help offset the gloom from a prolonged slump in housing, a severe credit crisis, soaring energy bills and rising layoff notices to help the country avert a deep recession.
Highlighting the pressures on the job market, new applicants for jobless benefits rose by a larger than expected 25,000 last week to 384,000, the highest level since late March, the labour department said yesterday in a separate report.
In a third report, the commerce department said business inventories grew by 0.5 per cent in April, more than double the 0.2 per cent rise in March and the best showing since inventories rose by 1 per cent in January.
"Recession? What recession?" asked Joel Naroff, chief economist at Naroff Economic Advisors pay day loans. "Spending in April and May was solid in just about every category.”
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said rebate cheques were giving a temporary boost to spending that would not last, resulting in weaker economic performance in coming months.