Retail sales increase despite hiring slump

Retail sales increased 0.5% in May from the prior month to a seasonally adjusted $455.64 billion, the Commerce Department said Tuesday.

Sales at clothing stores rose by 0.8%, the largest rise since November.

Tepid employment gains in May stirred concerns about the health of the economy.

Strong increases over the last two months have left overall sales up an annualized 5.7% to-date in the second quarter. It adds to evidence that the economy “is bouncing back pretty solidly”.

Tuesday’s report showed May’s retail gain was lead by a 1.3% gain in nonstore sales, which includes purchases on Amazon.com. Retail sales are calculated based on final sale prices and don’t account for price fluctuations.

Retail sales for the month of May both saw increases to varying degrees, according to data issued today by the United States Department of Commerce and the National Retail Federation. General Motors (GM) and Ford (F) reported lower US auto sales vs. a year earlier, but industrywide demand was slightly stronger than expected. Furniture store sales dipped 0.1%. The cost of an average gallon of regular gasoline was $2.38 as of June 10, the highest level since September. They boosted discretionary spending, splurging on sporting goods and hobbies, frequenting restaurants and bars, and buying electronics and appliances.

“If wage gains continue to get closer to 3%, that’s going to give people more money in their pocketbooks and should help consumer spending”, S&P Global economist Beth Ann Bovino said Monday. Total retail sales from March through May were up 2.4 percent compared to the same period a year ago. They drive about two-thirds of all US economic activity, and retail freight spends at least part of its life on trucks before making it to store shelves. Twelve percent of small businesses planned to hire more people, and 23 percent reported having more capital on hand to spend, a slight decline from 25 percent in April.

The Labor Department also released a report showing that import prices surged up by much more than expected in May amid another substantial increase in fuel prices.