US retail sales miss expectations as jobless claims rise

US retail sales rose less than expected in May and first-time applications for unemployment benefits increased last week, but that will probably do little to change views that the economy is regaining momentum.

The Commerce Department said on Thursday retail sales gained 0.3 per cent last month. While that was below economists' expectations for a 0.6 per cent rise, April's retail sales were revised to show a 0.5 per cent increase.

Retail sales, which account for a third of consumer spending, had previously been reported have gained 0.1 per cent in April.

In a separate report, the Labor Department said initial claims for state unemployment benefits climbed 4,000 to a seasonally adjusted 317,000 for the week ended June 7th.

With job growth rising solidly in May and manufacturing and services industries expanding strongly, the retail and jobless claims reports probably will not cause too much anxiety.

The economy added 217,000 jobs in May, the fourth straight month of job gains above 200,000. It has recouped all the 8.7 million jobs lost during the recession. The unemployment rate held steady at a 5.5 year low of 6.3 per cent.

Economic growth in the second quarter is expected to top a 3 per cent annual pace after contracting at a 1 per cent rate in the January-March period.

So-called core retail sales, which strip out automobiles, gasoline, building materials and food services, and correspond most closely with the consumer spending component of gross domestic product, were unchanged last month.

However, they were revised to show a 0.2 per cent rise in April, instead of the previously reported 0.1 per cent dip.

In May, consumers bought cars, lifting receipts at auto dealerships 1.4 per cent. Excluding cars, retail sales rose 0.1 per cent in May.

There were solid gains in sales at building materials and garden equipment stores, as well as receipts at non-store retailers, which include online sales. An increase in pump prices pushed up sales at gasoline stations.

There were, however, marginal declines in receipts at sporting goods shops, electronics and appliances stores, as well as at clothing retailers and restaurants and bars.

In another report, the Labor Department said import prices edged up 0.1 per cent last month after falling 0.5 per cent in April. In the 12 months through May, prices increased 0.4 per cent, advancing for the first time since July.

A sluggish global economy and slack in the domestic labor market is keeping inflation pressures muted, giving the Federal Reserve room to keep its ultra-easy monetary policy for a while.

The US central bank slashed overnight interest rates to a record low of zero to 0.25 per cent in December 2008 and is not expected to start raising them before the second half of 2015.

Reuters