May retail sales up, led by auto dealers

Washington, D.C. U.S. retail sales showed their first gain in three months as the month of May received a much-needed boost from car sales.

According to a report on Bloomberg.com released Thursday, the gains are not indicating a rebound in spending, however.

The pending demise of thousands of Chrysler and auto dealerships attracted customers constrained by rising unemployment and falling home values, said Bloomberg.

Retail sales rose 0.5% in May, as forecast, after a 0.2% drop in April, the Commerce Department said in Washington. Sales also increased 0.5% excluding autos, led by gasoline as prices jumped last month.

Car dealers were among the retailers that performed the best last month. Auto sales increased 0.5% after falling 0.4% in April.

Receipts at service stations climbed 3.6% in May, reflecting in part higher gasoline prices.

Building-material, clothing, grocery stores and pharmacies were among the other retailers that showed gains in demand.

Excluding cars, gasoline and building materials, sales were unchanged last month after falling 0.1% in April.

A separate report showed claims for jobless benefits fell last week.

Unemployment claims dropped to 601,000, lower than economists had expected and capping three consecutive weeks of falling claims.

The number of jobless continuing to collect benefit payments still rose to a record for the 19th straight time, to 6.82 million.

The jobless rate will climb to 10% by the end of 2009, 1.6 percentage points higher than projected at the start of the year, according to the median forecast of economists surveyed by Bloomberg.

Personal spending, which accounts for 70% of the economy, will fall at a 0.6% annual pace in the current quarter and rise at an average 1.1% pace in the last six months of the year, down from last month’s projections. For all of 2009, purchases will drop 0.7%, the worst performance since 1974, said the report.