Retail stocks rally on positive economic data

New York Retail stocks rose Monday on the release of economic data that seemed to indicate that the worst of the recession might be past.

A government report showed U.S. consumer spending in April fell slightly less than analysts expected. The Commerce Department reported that consumers trimmed spending by 0.1%, less than the 0.2% reduction forecast by economists. Personal income was also better than anticipated, coming in flat instead of negative.

The Commerce Department also reported that construction spending rose for the second straight month in April by 0.8%, far better than the 1.2% decline economists had expected.

A second report, from the Institute of Supply Management, also contained a bit of positive news. It showed that the U.S. manufacturing sector contracted at a slower rate in May than in the previous month.