According to data released Thursday by the Commerce Department, U.S. retail sales rose sharply in May and a revised March posted an increase for the third straight month. The May retail sales seem a strong indication that a strong job market is finally is starting to bear fruit for the consumer economy, and Americans could finally are starting to feel good enough about their finances to start opening up their wallets again.
Retail sales rose 1.2% in May, a big improvement from the nearly flat 0.2% gain in April. Over the past 12 months, sales have risen a solid 2.7%. March retail sales were also revised upward to a 1.5% rise – the measure’s biggest monthly gain in five years.
It also hints that overall economic growth is set to rebound from a dismal first quarter of 2015, when GDP fell an estimated 0.7% thanks to a winter-driven slowdown in both consumer spending and housing activity. Some economists are expecting the GDP to come roaring back in the second quarter, with 3.1% estimated growth.
Auto dealers and gasoline stations posted the strongest sales, but most major retail segments saw healthy gains.
Last month, overall retail sales were buoyed by a 2% jump in receipts at car dealerships. Sales at service stations rose 3.7%, reflecting a rise in oil prices.
Sales at electronic and appliance stores gained 0.1%, while receipts at furniture stores increased 0.8%. Sales at clothing stores were up 1.5%.
Receipts at online stores climbed 1.4% and sales at sporting goods stores increased 0.8%.
Sales of building materials and garden equipment advanced 2.1%. Sales at restaurants and bars also nudged up 0.1%.
In a separate report, the Labor Department said Thursday that weekly applications for jobless aid increased 2,000 to a seasonally adjusted 279,000. The four-week average, a less volatile measure, rose 3,750 to 278,750.
Many economists have been predicting an uptick in sales because of steady job creation, somewhat improved wage growth, rising home sales and higher consumer confidence. Still, the picture that’s emerged since the economy exited recession in mid-2009 is one of stop-and-go spending by consumers.
Could this be the long awaited rebound?