U.S. retail sales climb in May by the most in 6 months

Sales at USA retailers rose 0.8% from a month earlier to $502 billion, the Commerce Department said Thursday.

Retail sales are closely watched by economists because they provide an early read on consumer spending, the principal driver of the US economy. Data for April was revised up to show sales rising 0.4 percent instead of the previously reported 0.2 percent gain. Retail sales in May increased 5.9 percent from a year ago.

Economists polled by Reuters had forecast retail sales rising 0.4 percent in May. Excluding purchases of autos and gasoline, sales climbed 0.8 percent, also the most since November and topping projections.

The strong labor market and solid economic growth are among reasons why Federal Reserve policy makers raised interest rates Wednesday for the second time this year and projected two more hikes in 2018. These so-called coreretail sales correspond most closely with the consumer spending component of gross domestic product.

"This suggests a pretty strong rebound in second-quarter growth", said Joseph Song, senior USA economist at Bank of America Corp. They were previously reported to have risen 0.5 percent in April.

The strong retail sales report added to data ranging from the labor market to manufacturing and trade in suggesting the economy was regaining momentum in the second quarter after growth slowed at the start of the year amid a sharp step-down in consumer spending.

Sales at home and garden stores jumped 2.4 percent, the most in eight months, and rose 2 percent at gas stations, which mostly reflects higher gas prices.

In May, auto sales rose 0.5 percent after gaining 0.2 percent in April. The U.S. saving rate slipped to 3.1 percent in the first three months of the year, down from 3.9 percent a year earlier. Receipts at clothing stores surged 1.3 percent, the largest gain since March 2017.

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