Bloomberg News
The numbers: Reports of the death of the American consumer were greatly exaggerated as the May retail sales data rose at a solid pace and the decline in the prior month was revised to show a gain.
Retail sales increased 0.5% in May, with broad-based gains, the Commerce Department said Friday. Economists polled by MarketWatch had forecast a solid 0.7% gain.
There was a big rise in auto sales, but the even when that was stripped out, retail sales rose 0.5%, the government said.
April sales were revised up to a 0.3% gain from a the intial report of a 0.2% fall.
What happened: Almost all categories showed gains in May. The only decline were food and beverage stores, department stores, miscellaneous stores and clothing.
Electronic store sales jumped 1.1% in May. Health and personal care stores also had a strong sales gain.
Auto sales rose 0.7%. They account for about one-fifth of all retail sales. Retail sales excluding autos and gas also rose 0.5%.
“Nonstore” retail sales rose 1.4% in May, the strongest gain since January.
Big picture: Retail sales have been choppy this year, raising some doubts about the health of the overall economy. Economists have been counting on consumers to keep spending at a health level to prolong an expansion that will set a record for the longest ever later this summer.
The solid report may allow the Federal Reserve to wait a bit before cutting interest rates. After the weak job report for May, some economists thought the Fed might ease as soon as next week to bolster what was perceived as a slowing economy. The market is now expecting the Fed to cut rates in July. Some prominent economists, like the team at Goldman Sachs, think expectations of a rate cut over overdone and the central bank will remain on hold this year.
Market reaction: The Dow Jones Industrial Average DJIA, +0.39% was set to open lower on Friday on weak Chinese data. The index has been up seven of the last nine trading days.
