NEWS
06/14/2016 04:37 EDT | Updated 06/15/2017 01:12 EDT

US retail sales rose in May despite slower hiring

WASHINGTON — U.S. shoppers increased their spending in May, a sign that consumers are undeterred by the recent slowdown in hiring.

The Commerce Department said Tuesday retail sales rose a seasonally adjusted 0.5 per cent last month, the second straight increase after a 1.3 per cent gain in April.

Retail sales appear to be improving after a weak start to 2016, but a recent speed bump in job growth has raised concerns that cracks may form in consumer confidence. Hiring slowed to a paltry 38,000 in May after years of monthly gains that routinely exceeded a robust 200,000.

The uncertainty is whether shopping will slow if the jobs picture looks clouded. Stronger hiring in previous months left Americans feeling comfortable enough to dine out and order items over the internet. Sales in these categories have improved at faster pace than total retail sales, which has been weighed down by a shift away from department stores and shopping malls.

Online and non-store purchases climbed 1.3 per cent in May. Sporting goods stores, restaurants, clothiers and auto dealers also enjoyed higher sales. Rising gasoline costs fueled a 2.1 per cent jump in spending at gas stations, largely reflecting the fact the government doesn't adjust its retail sales report for inflation or changes in prices.

Sales declines hit building material stores, furnishers and department stores last month.

Total retail sales have risen 2.5 per cent from a year ago.

Roughly 70 per cent of all U.S. economic activity depends on consumers, a group that continues to be somewhat restrained in their spending despite a recovery that has brought the unemployment rate to a low 4.7 per cent. Many Americans have been reluctant to increase their spending after the housing bust that triggered the Great Recession.

Gas prices have fallen over the past year, yet the easing of this burden failed to deliver much of a boost to consumer spending. That financial tailwind has also reversed somewhat as oil prices rebound. Average gas costs are now climbing, having risen 7.5 per cent in the past month to $2.38 a gallon, according to AAA.

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