U.S. Retail Sales Jump in May

Economic Recovery ImminentRetail sales jumped in May, suggesting the U.S. economic recovery is picking up momentum.

On Thursday, June 11, the Census Bureau reported better-than-expected retail and food services sales. For the month of May, total retail and food service sales came in at $444.9 billion, representing a 2.7% increase compared to same time last year. The Bureau also revised its April sales figures upward to 0.2%. (Source: U.S. Census Bureau, June 11, 2015.)

The report showed across-the-board strength over all segments of the economy. Retail trade sales surged 2.0% year-over-year. Motor vehicle sales increased by 8.2%, while food and drink also gained 8.2% compared to last year.

The solid gain in May implies America’s economic recovery is picking up steam. Consumer spending is a big part of the U.S. economy, making up around two-thirds of the nation’s gross domestic product (GDP).

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The data also proves lower energy prices have become an economic windfall for households. Consumers are saving big at the gas pump and taking that extra cash to the mall.

Retailers are the biggest winners from this announcement. In early Thursday trading, the SPDR S&P Retail ETF (NYSE/XRT) soared over one percent following the report’s publication. Investors will likely see these strong sales numbers show up through corporate earnings in upcoming quarters.

A stronger economy could also push the Federal Reserve into raising interest rates sooner than expected this year. More consumer spending could also create inflationary pressure in the U.S. economy, so the Fed will have more reason to step back on stimulus measures.

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