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Retail sales up a strong 0.9% in May

NEW YORK (AP) — Shoppers stepped up their spending in May and surpassed expectations as temperatures warmed and gasoline prices leveled off.

Retail sales rose 0.9%, up from a revised 0.4% gain in April, according to Commerce Department data released Wednesday. Sales got a boost from generous government tax refunds in both April and May, though economists say that cash cushion is starting to fade.

Excluding sales at gas stations, retail sales in May rose 0.7%.

The figures aren’t inflation-adjusted so higher prices likely helped boost sales. But economists point to healthy spending with increases that were broad-based. Business at clothing, accessory and furniture stores all posted sales gains. Online sales rose 1.5%.

There were a few weak spots. Electronics and appliance stores and department stores both registered slight sales declines.

The data offers only a snapshot of consumer spending and doesn’t include activities like travel and hotel stays. The lone services category – restaurants – registered a 0.1% decline. That might have reflected how high gas prices forced shoppers to cut back on driving to eating establishments, according to Sam Tombs, chief U.S. economist at Pantheon Macro.

But the so-called control group–which excludes food services, autos, building materials and gas station sales and is used to calculate economic growth–rose 0.7%. That suggests solid spending, economists said.

Consumers are the engine of the American economy, driving most of the nation’s economic growth. And the latest retail sales report underscores that spending has remained resilient so far this year despite rising prices. Solid increases in hiring have also buoyed spending, economists said.

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