Sales at US retail stores barely edged up in May as consumers cut purchases of goods ranging from new cars to building materials, the government said today in a report that showed softening in the pace of vital consumer spending after a vigorous April.
Sales rose a scant 0.1 per cent to a seasonally adjusted $291.31 billion after an upwardly revised 1.4 per cent jump in April, the Commerce Department said. That was even weaker than the slight 0.2 per cent gain Wall Street economists had forecast.
Retail sales are closely monitored as a proxy for overall consumer spending that accounts for two-thirds of national economic activity. Analysts said the sales figures reinforced the impression that the second quarter could be the weakest for the economy this year.
New-car dealer sales that account for one-quarter of monthly retail business dropped 0.7 per cent to $70.68 billion last month after climbing 2.3 per cent in April. Excluding the auto business, retail sales in May were ahead 0.3 per cent, still well behind April's 1.1 per cent gain.
Some analysts said the May figures, building on April's strong gain, were moderately reassuring and that prospects were that spending would get a boost later in the year once tax rebates begin to flow back to consumers under the Bush administration's tax-cut plan.
The Federal Reserve has cut interest rates five times so far this year and its policy setting Federal Open Market Committee is set to meet again on June 26th-27th.