U.S. retails sales grow strongly in May, consumer spending remains strong

U.S. retail sales grew slightly below expectations in May. Sequentially, retail sales grew 0.5 percent as compared with expectations of a rise of 0.6 percent. The April month’s data was upwardly revised from a fall of 0.2 percent to 0.3 percent. Stripping the most volatile components (gas, autos, building materials, and food services), the retail sales ‘control group’ rose 0.5 percent, and was upwardly revised from a flat reading in April to +0.4 percent.

Most of the sub-categories rose in the month, with non-store retailers leading the way with a rise of 1.4 percent. Electronics and sporting goods both rose 1.1 percent, whereas motor vehicles and parts and general merchandise both rose 0.7 percent.

On the other hand, sales and miscellaneous, department stores, and food and beverage stores saw declines in the month. Declines in these categories in May came after recording strong rises in April.

Looking at today’s data, it appears that consumer spending is regaining its footing in the second quarter with growth likely to exceed 3 percent mark, noted TD Economics in a research report. Business confidence has eased lately; however, consumer confidence has held up well. As long as job growth continues, the fundamentals will remain in place for consumers to drive the economic growth.

“Indeed, with credit spreads remaining tight and treasury yields falling, households are benefiting from lower borrowing costs, which should support the housing market and spending on related items (including autos) in the months ahead”, added TD Economics.

At 16:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 110.063. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex