Economic Growth

Retail Sales Showed Stronger Than Expected Growth Last Month

Low interest rates play a big role


Retail sales in the U.S. rose more than forecast in May, showing job gains and lower borrowing costs are encouraging consumers to spend.

The 0.6 percent increase was the biggest in three months and followed a 0.1 percent gain in April, Commerce Department figures showed today in Washington. The median forecast of 83 economists surveyed by Bloomberg called for a 0.4 percent advance. The figures used to calculate economic growth, which exclude categories such as automobiles, climbed 0.3 percent.

Interest rates held down by the Federal Reserve's record monetary stimulus are bolstering car sales in the face of higher taxes and limited income growth. Higher stock and home prices are shoring up confidence, driving orders at retailers such as Gap Inc. (GPS) and underpinning the household purchases that account for about 70 percent of the economy.