Tuesday, June 15, 2004

Retail sales increase by 1.2 percent in May

By Jeannine Aversa
The Associated Press

WASHINGTON - The appetite of America's shoppers returned in May, boosting sales at the nation's retailers by 1.2 percent, a fresh sign the economic recovery is on solid footing.

chart The latest snapshot of retail activity reported by the Commerce Department on Monday comes after a consumer pullback in April, which depressed retail sales by 0.6 percent. May's increase was slightly larger than the 1 percent rise some that economists were predicting and was the biggest gain since March.

In a second report from the department, the U.S. trade deficit swelled to a record $48.3 billion in April, reflecting Americans' demand for foreign-made goods, especially cars, TVs, furniture and clothes.

April's trade deficit was 3.8 percent larger than March's shortfall, which had been the previous all-time monthly high. The rebounding U.S. economy has been supporting demand for imported goods.

Imports of goods and services rose by 0.2 percent in April to a record $142.3 billion. Exports, meanwhile, dropped by 1.5 percent to $93.9 billion, which nonetheless was the second-highest level on record.

Higher imported crude oil prices also contributed to the trade deficit in April. The average price of imported crude oil rose to $31 a barrel, the highest since February 1983.

On Wall Street, though, inflation fears sent stocks lower. The Dow Jones industrials lost 75.37 points to close at 10,334.73.

In the retail sales report, sales at automobile dealerships increased by 2.7 percent in May, an improvement from the 2.1 percent decline in April and the biggest gain since November. Excluding sales at automobile dealerships, retail sales went up 0.7 percent in May.

"As the economy continues to pick up steam, retailers are reaping the benefits," said Rosalind Wells, chief economist at the National Retail Federation.

Sales at clothing stores, department stores, health and beauty shops, sporting goods, music and book stores, and grocery stores all increased in May. However, sales of furniture and building supplies declined. People also ate out less, causing sales at restaurants and bars to dip.

Consumer spending accounts for about two-thirds of all U.S. economic activity.

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