Retail sales surged in May as weekly jobless claims fall

Retail sales surged in May as weekly jobless claims fall

Retail sales increased more than expected in May as consumers bought motor vehicles and a range of other goods even as they paid more for gasoline, the latest indication of an acceleration in economic growth in the second quarter.

Other data on Thursday showed a further tightening in labor market conditions, with first-time applications for unemployment benefits unexpectedly falling last week and the number of Americans on jobless rolls declining to a near 44¹/₂-year low.

The reports came a day after the Federal Reserve raised interest rates for a second time this year and offered an upbeat assessment of the economy. The central bank described economic activity as “rising at a solid rate” and the labor market as continuing to “strengthen.” The Fed forecast two more rate hikes in the second half of 2018.

“In short, the Fed was right to upgrade its assessment of economic growth to ‘solid’ in yesterday’s statement,” said Paul Ashworth, chief US economist at Capital Economics in Toronto.

The Commerce Department said retail sales jumped 0.8 percent last month, the biggest advance since November 2017. Data for April was revised up to show sales rising 0.4 percent instead of the previously reported 0.2 percent gain.

Retail sales are being underpinned by a robust labor market, which is gradually boosting wage growth.

In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 218,000 for the week ended June 9.

The number of people receiving benefits after an initial week of aid declined 49,000, to 1.70 million, in the week ended June 2, the lowest level since December 1973.

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