US retail sales rise 1% in May

Retail sales in the United States rose twice as much as forecast in May as Americans used their tax rebates to shop at electronics and department stores, and record gasoline prices swelled service-station receipts.

Purchases climbed 1 percent, the most since November, following a 0.4 percent gain the prior month that was previously reported as a drop, the Commerce Department said in Washington. The median forecast of economists surveyed by Bloomberg News projected a 0.5 percent gain. Purchases excluding gasoline increased 0.8 percent last month.

The figures indicate the government's stimulus plan and the decline in interest rates engineered by the Federal Reserve are benefiting retailers such as Wal-Mart Stores Inc and lifting the economy. The report bears out Fed Chairman Ben S. Bernanke's comment this week that the risk of a "substantial downturn" had receded in the past month.

"You cannot have a severe, prolonged contraction of the economy unless consumers quit spending, and so far they are holding their own," Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd in New York, said before the report.

Economists' forecasts ranged from a decline of 0.3 percent to a gain of 1.2 percent. Excluding autos, sales rose 1.2 percent, also exceeding the median forecast of a 0.7 percent rise.

Yesterday's report showed sales at every merchant category increased last month, except for miscellaneous retailers.

Purchases of electronics increased 0.7 percent and sales at department stores jumped 1.2 percent, the most since March 2007. Building-material retailers sold 2.4 percent more than in the prior month.

Sales at automobile dealerships and parts stores increased 0.3 percent after dropping 2.1 percent in April. That contrasts with industry figures that showed cars and light trucks sold at an annual pace of 14.3 million annual pace in May, the fewest in almost a decade, as sales of pickup trucks and sport-utility vehicles plummeted.

'Structural change'

The surge in fuel costs is "a structural change, not just a cyclical change", General Motors Corp Chief Executive Officer Rick Wagoner said on June 3 as Detroit-based GM said it would close four North American pickup and large SUV factories and focus more on making small, fuel-efficient cars.

Filling station sales surged 2.6 percent in May. Regular gasoline reached as high as $3.98 a gallon in late May, about 53 cents more than the average for the prior month, according to AAA.

"Income-tax rebates are fueling this latest rise in retail sales, which is a surprise since gasoline prices were expected to eat up most of this consumer windfall," Bank of Tokyo-Mitsubishi's Rupkey said.

Excluding autos, gasoline and building materials, the retail group the government uses to calculate gross domestic product, sales climbed 0.8 percent, after a 1 percent increase the prior month. The government uses data from other sources to calculate the contribution from the three categories excluded.

Wal-Mart Stores Inc, the world's largest retailer, had a 3.9 percent jump in same-store sales last month, as consumers bought cut-rate staples and took advantage of promotions linked to the tax rebates.

Agencies

(China Daily 06/13/2008 page17)