Retail sales end 2-month slump

Total sales rise in May, meeting expectations. Sales excluding auto purchases also up in the month.

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By Parija B. Kavilanz, CNNMoney.com senior writer

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NEW YORK (CNNMoney.com) -- Retail sales rose in May, breaking two straight months of declines, but the gains were fueled primarily by auto purchases and higher gas prices that pumped up gasoline station sales.

"This report on a high level looks better, but it's not very reassuring when you look beneath the surface," said Michael Niemira, chief economist with the International Council of Shopping Centers (ICSC).

The Commerce Department said total retail sales rose 0.5% last month, compared with April's revised decline of 0.2%. Sales in April were originally reported to have declined 0.4%.

Economists surveyed by Briefing.com had been expecting May sales to increase 0.5%.

Sales excluding autos and auto parts also rose a better-than-forecast 0.5%, compared to a revised decline of 0.2% in April. But the increase in the measure was driven mostly by higher gas prices that resulted in a 3.6% jump in gasoline station sales.

Economists had forecast May sales, excluding auto purchases, to rise 0.2% from the previous month.

Most economists typically look at core retail sales -- excluding gasoline station purchases and auto sales -- for a more accurate assessment of the health of the consumer.

Consumer spending is vital to the economy since it accounts for two-thirds of all economic activity. So far this year, the nation's gross domestic product has declined at a 5.7% annual rate in the first quarter, the third straight quarter of decline.

Much of this softness stems from a continued pullback in consumer spending as more budget-conscious Americans shop only for necessities.

Stripping out both gasoline station and auto sales, core retail sales showed a marginal gain of 0.1% last month.

The report showed that sales in most discretionary categories fell in May. Electronics sellers logged a 0.5% sales decline, furniture sales fell 0.4% and department stores sales declined 0.7%.

Sporting goods and hobby stores registered a 0.8% decline.

But clothing sellers and stores selling building and garden materials bucked the downtrend, with clothing up 0.4% and building gaining 1.3%.

"Weather was a factor last month and likely favored gardening stores," said Niemira. "So this could just be a temporary blip."

"If we look for a broader evidence of the return of the consumer, I don't think it's there yet, Niemira said. "Consumer spending is still pretty sluggish." To top of page

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