WASHINGTON -- U.S. retail sales rose more than expected in May as households stepped up purchases of automobiles and bought other goods, suggesting the economy was squeezing out of a recent soft patch.
The Commerce Department said Thursday retail sales increased 0.6 percent after edging up 0.1 percent in April.
Economists polled by Reuters had expected retail sales, which account for about 30 percent of consumer spending, to rise 0.4 percent last month.
So-called core sales, which strip out automobiles, gasoline and building materials and correspond most closely with the consumer spending component of gross domestic product, increased 0.3 percent after rising 0.2 percent in April.
The increase in core sales offers hope consumer spending probably wouldn't slow too much in the second quarter, after spending fell in April for the first time in a year.
Coming on the heels of data last week showing a steady pace of job gains and a jump in consumer confidence, the retail sales report hinted at underlying strength in the economy, despite belt-tightening in Washington, which is weighing on factories.
Sales rose in most categories, with receipts at auto dealerships rising 1.8 percent -- the biggest increase since November -- after advancing 0.7 percent the prior month. Excluding autos, sales gained 0.3 percent after being flat the prior month.
The increase in sales came despite a 0.2 percent drop in receipts at gasoline stations. Excluding gasoline stations, sales rose 0.6 percent.
Sales at building materials and garden equipment suppliers increased 0.9 percent after rising 3.6 percent in April. Demand for housing is boosting home building, which is helping to anchor the broader economy's recovery.
There were also gains in sales at sporting goods, hobby, book and music stores, which rose 0.6 percent. But receipts at clothing stores slipped 0.2 percent.
Sales at electronics and appliances stores fell 0.4 percent, while receipts at furniture stores dropped 0.8 percent.
Lower Prices on Imports and Exports
Another government report out Thursday showed prices for U.S. imports and exports fell unexpectedly in May, a sign of cooler economic growth worldwide that could hurt American factories but likely gave some respite to consumers.
Import prices slipped 0.6 percent last month, the third consecutive decline, the Labor Department said.
Economists polled by Reuters had expected prices to be unchanged last month.
A drop in oil prices contributed to much of the decline. Stripping out petroleum, import prices fell a more modest 0.3 percent.
That is both good and bad news for the U.S. economy. On the one hand, falling fuels costs give consumers more money to spend on other things, and mean less hardship for struggling households.
But the reason for the decline in fuel prices during May was probably tied to a global economic chill caused by Europe's debt crisis, which has slammed economies on the continent and even hurt economic output in China.
Falling global demand also hurts American companies, who sell everything from industrial machines to architectural services on the global market.
U.S. export prices fell 0.5 percent in May, also marking the third straight month of declines. Economists polled by Reuters had expected export prices to be flat during the month.
At the same time, oil prices have turned higher in June, helped by signs of stronger job growth in the United States.