Tallahassee Journal

Retail sales rebounded in May

Retail sales rebounded in May

Consumers finally opened their wallets in May as retail sales bounced back from a disappointing stretch that surprised economists. Sales jumped 1.2%, the Commerce Department said Thursday, in line with the increase projected by economists surveyed by Bloomberg. Excluding volatile autos and gasoline, sales jumped 0.7%. Economists expected a rise of 0.5%.635538366979530007-AP-Holiday-Shopping-Weekend-Sales

Also encouraging is that retail sales were revised sharply higher for March, which now shows a gain of nearly 1%. In May, sales increased sharply in many categories, rising 2% for auto dealers, 2.1% for building material supply stores and 1.5% at clothing retailers . Sales were also up 0.8% for retailers of furniture, sporting goods and general merchandise, including department stores.

Only health and personal care stores posted a drop as sales fell 0.3% but that followed a strong increase in April. The report, combined with positive news this week on consumer services spending in the first quarter, could mean that a government estimate that the economy shrank 0.7% at an annual rate during the first three months of the year will be revised to show no contraction, says economist Paul Ashworth of Capital Economics.

The news also could signify that consumers are finally poised to drive stronger economic growth this year, with a strong dollar and low oil prices hampering business investment. Extreme winter weather was largely blamed for discouraging consumer purchases through the winter, but spending was weak even in April, prompting many economists to wonder if Americans were ever going to splurge with their hefty savings from lower gasoline prices. Some economists said consumers held back because they weren’t convinced until recently that cheap fuel would be around for the long term. Strong job growth, rising stocks and early signs of a pickup in wages also have been expected to spur stronger consumer outlays.

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