WASHINGTON -- U.S. retail sales rose more than expected in May as households stepped up purchases of automobiles and bought other goods, suggesting the economy was squeezing out of a recent soft patch.
The Commerce Department said Thursday retail sales increased 0.6 percent after edging up 0.1 percent in April.
Economists polled by Reuters had expected retail sales, which account for about 30 percent of consumer spending, to rise 0.4 percent last month.
So-called core sales, which strip out automobiles, gasoline and building materials and correspond most closely with the consumer spending component of gross domestic product, increased 0.3 percent after rising 0.2 percent in April.
The increase in core sales offers hope consumer spending probably wouldn't slow too much in the second quarter, after spending fell in April for the first time in a year.
Coming on the heels of data last week showing a steady pace of job gains and a jump in consumer confidence, the retail sales report hinted at underlying strength in the economy, despite belt-tightening in Washington, which is weighing on factories.
Sales rose in most categories, with receipts at auto dealerships rising 1.8 percent -- the biggest increase since November -- after advancing 0.7 percent the prior month. Excluding autos, sales gained 0.3 percent after being flat the prior month.
The increase in sales came despite a 0.2 percent drop in receipts at gasoline stations. Excluding gasoline stations, sales rose 0.6 percent.
Sales at building materials and garden equipment suppliers increased 0.9 percent after rising 3.6 percent in April. Demand for housing is boosting home building, which is helping to anchor the broader economy's recovery.
There were also gains in sales at sporting goods, hobby, book and music stores, which rose 0.6 percent. But receipts at clothing stores slipped 0.2 percent.
Sales at electronics and appliances stores fell 0.4 percent, while receipts at furniture stores dropped 0.8 percent.
Lower Prices on Imports and Exports
Another government report out Thursday showed prices for U.S. imports and exports fell unexpectedly in May, a sign of cooler economic growth worldwide that could hurt American factories but likely gave some respite to consumers.
Import prices slipped 0.6 percent last month, the third consecutive decline, the Labor Department said.
Economists polled by Reuters had expected prices to be unchanged last month.
A drop in oil prices contributed to much of the decline. Stripping out petroleum, import prices fell a more modest 0.3 percent.
That is both good and bad news for the U.S. economy. On the one hand, falling fuels costs give consumers more money to spend on other things, and mean less hardship for struggling households.
But the reason for the decline in fuel prices during May was probably tied to a global economic chill caused by Europe's debt crisis, which has slammed economies on the continent and even hurt economic output in China.
Falling global demand also hurts American companies, who sell everything from industrial machines to architectural services on the global market.
U.S. export prices fell 0.5 percent in May, also marking the third straight month of declines. Economists polled by Reuters had expected export prices to be flat during the month.
At the same time, oil prices have turned higher in June, helped by signs of stronger job growth in the United States.
9 Numbers That'll Tell You How the Economy's Really Doing
Retail Sales Rise in May as Import, Export Prices Soften
The gross domestic product measures the level of economic activity within a country. To figure the number, the Bureau of Economic Analysis combines the total consumption of goods and services by private individuals and businesses; the total investment in capital for producing goods and services; the total amount spent and consumed by federal, state, and local government entities; and total net exports. It's important, because it serves as the primary gauge of whether the economy is growing or not. Most economists define a recession as two or more consecutive quarters of shrinking GDP.
The CPI measures current price levels for the goods and services that Americans buy. The Bureau of Labor Statistics collects price data on a basket of different items, ranging from necessities like food, clothing and housing to more discretionary expenses like eating out and entertainment. The resulting figure is then compared to those of previous months to determine the inflation rate, which is used in a variety of ways, including cost-of-living increases for Social Security and other government benefits.
The unemployment rate measures the percentage of workers within the total labor force who don't have a job, but who have looked for work in the past four weeks, and who are available to work. Those temporarily laid off from their jobs are also included as unemployed. Yet as critical as the figure is as a measure of how many people are out of work and therefore suffering financial hardship from a lack of a paycheck, one key item to note about the unemployment rate is that the number does not reflect workers who have stopped looking for work entirely. It's therefore important to look beyond the headline numbers to see whether the overall workforce is growing or shrinking.
The trade deficit measures the difference between the value of a nation's imported and exported goods. When exports exceed imports, a country runs a trade surplus. But in the U.S., imports have exceeded exports consistently for decades. The figure is important as a measure of U.S. competitiveness in the global market, as well as the nation's dependence on foreign countries.
Each month, the Bureau of Economic Analysis measures changes in the total amount of income that the U.S. population earns, as well as the total amount they spend on goods and services. But there's a reason we've combined them on one slide: In addition to being useful statistics separately for gauging Americans' earning power and spending activity, looking at those numbers in combination gives you a sense of how much people are saving for their future.
Consumers play a vital role in powering the overall economy, and so measures of how confident they are about the economy's prospects are important in predicting its future health. The Conference Board does a survey asking consumers to give their assessment of both current and future economic conditions, with questions about business and employment conditions as well as expected future family income.
The health of the housing market is closely tied to the overall direction of the broader economy. The S&P/Case-Shiller Home Price Index, named for economists Karl Case and Robert Shiller, provides a way to measure home prices, allowing comparisons not just across time but also among different markets in cities and regions of the nation. The number is important not just to home builders and home buyers, but to the millions of people with jobs related to housing and construction.
Most economic data provides a backward-looking view of what has already happened to the economy. But the Conference Board's Leading Economic Index attempts to gauge the future. To do so, the index looks at data on employment, manufacturing, home construction, consumer sentiment, and the stock and bond markets to put together a complete picture of expected economic conditions ahead.