U.S. retail sales jump in May, brighten growth outlook

WASHINGTON, June 11 U.S. retail sales surged in May as households boosted purchases of automobiles and a range of other goods even as they paid a bit more for gasoline, the latest sign economic growth is finally gathering steam.

The Commerce Department said on Thursday retail sales increased 1.2 percent last month after an upwardly revised 0.2 percent gain in April.

Economists polled by Reuters had forecast retail sales advancing 1.1 percent last month. April sales were previously reported to have been unchanged. March sales were also revised to show them rising 1.5 percent instead of 1.1 percent.

Solid retail sales data added to robust job growth in May and stabilizing manufacturing activity in suggesting the economy was finding momentum after getting off to a slow start in the second quarter. That likely keeps the Federal Reserve on track to raise interest rates this year.

The government's most recent growth estimate showed gross domestic product contracted at a 0.7 percent annual pace in the first quarter, but data on healthcare spending on Wednesday, together with revisions to construction spending, trade and wholesale inventory reports suggested output probably shrank at only a 0.1 percent rate.

Retail sales excluding automobiles, gasoline, building materials and food services increased 0.7 percent last month after an upwardly revised 0.1 percent rise in April.

The so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

Economists had forecast core retail sales rising 0.5 percent in May after they were previously reported to have been flat in April.

Consumer spending is likely to remain fairly strong in the coming months, supported by high savings, rising house prices and a tightening labor market.

Overall retail sales last month were buoyed by a 2.0 percent jump in receipts at auto dealerships. Sales at service stations rose 3.7 percent, reflecting a rise in gasoline prices. Sales at electronic and appliance stores gained 0.1 percent, while

receipts at furniture stores increased 0.8 percent.

Sales at clothing stores surged 1.5 percent. Receipts at online stores climbed 1.4 percent and sales at sporting goods stores increased 0.8 percent. Sales of building materials and garden equipment advanced 2.1 percent.

Sales at restaurants and bars nudged up 0.1 percent.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)