New data from the Commerce and Labor departments indicated higher-than-expected gains in retail sales and a reduction in first-time unemployment applications in May, pointing toward a continued economic upturn. Federal lawmakers, however, remain cautiously optimistic.
Retail sales rose 0.6 percent for the month, a full 0.2 percent more than projected. This continued the upward trend from April’s 0.1 percent growth in retail. The overall rise was helped by a 1.8 percent surge in motor vehicle sales for the month, the largest since November. The other significant raise was at stores selling homebuilding materials, which saw sales increase 0.9 percent.
Overall, core sales (which discount motor vehicles, gasoline and building materials) rose 0.3 percent, up from 0.2 percent growth in April.
The new data has caused economists to revise their projections on consumer spending: JPMorgan now expects consumer spending to grow at an annual rate of 2 percent for the quarter, as opposed to its previous prediction of 1.7 percent.
Data from the Labor Department showed initial claims for state unemployment benefits declined by 12,000 the week of June 2-8.
Despite the new data, the Federal Reserve was not expected to make any major policy changes at meetings held Tuesday and Wednesday of this week, citing continuing struggles in the manufacturing sector.