"But I would like to see that confirmed in the near term, so that we can get on with our normalization process"
- James Bullard, Federal Reserve Bank of St. Louis President
US retail sales surged sharply in May and rose for the third month in a row, as households boosted purchases of automobiles and a range of other goods. The better-than expected data is likely to strengthen the Fed's confidence in the second quarter growth rebound. Retail sales climbed a seasonally adjusted 1.2% last month, the Commerce Department said. The increase in retail sales, which makes up as much as one-third of all consumer spending, provides more signs the economy has regained momentum after contracting in the first quarter. Yet sales may have also been boosted by the Memorial Day holiday that gave people an extended weekend in which to shop. The government's most recent growth estimate showed US economic output shrank at a 0.7% annual rate in the March quarter, but data on healthcare spending, together with revisions to construction spending, trade and wholesale inventory reports suggested GDP probably contracted at only a 0.1% rate.
Meanwhile, a separate report showed the number of Americans applying for first-time unemployment benefits increased slightly last week but remained at a historically low level, suggesting the economy continues to steadily create jobs. Initial jobless claims rose by 2,000 to a seasonally adjusted 279,000 in the week ended June 6, according to the Labor Department.
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