US retail sales rose more than expected in May as households bought more cars and other consumer goods, while separate data showed the number of Americans filing new claims for jobless benefits declined last week, both indicating resilience in the country’s labour market.

Data from the commerce department showed retail sales increased 0.6 per cent – the biggest rise in three months – following a 0.1 per cent uptick in April. Economists surveyed by Bloomberg had expected a 0.5 per cent rise.

Core sales, which strip out volatile components such as cars, petrol and building materials and are the best guide to the underlying health of the US consumer, rose 0.3 per cent in May, after a 0.2 per cent gain the prior month.

The latest data come on the heels of upbeat jobs numbers and a better than forecast consumer sentiment reading, hinting at underlying strength in the world’s largest economy.

The retail sales report is the government’s first look each month at consumer spending, which drives 70 per cent of economic activity. Aside from an improving employment picture, rising home values have allowed consumers to withstand a rise in taxes which has lowered take-home pay for most Americans.

Even so, across-the-board cuts to public spending are still weighing on businesses and factory activity, giving the Federal Reserve another reason to wait before starting to taper its third round of quantitative easing.

Consumer spending from January through March grew at the fastest pace in more than two years, helping the economy expand at a solid annual rate of 2.4 per cent. Although economists expect growth to slow in the April to June quarter they forecast a pick-up in the latter half of the year.

Eight of 13 major retail categories showed gains last month. Sales at car dealerships rose 1.8 per cent in May, the largest increase since November, following a 0.7 per cent gain the prior month. The increase in sales came despite a 0.2 per cent dip in spending from petrol stations.

The country’s housing recovery boosted sales at building materials shops and garden equipment suppliers, up 0.9 per cent after a much stronger 3.6 per cent gain in April.

Sales at sporting goods, hobby, book and music stores ticked higher while sales at electronics and appliances stores and clothes shops slipped.

Meanwhile, claims for unemployment insurance dropped 12,000 to 334,000 in the week ended June 8, from 346,000 the prior week, labour department data showed.

The four-week moving average, which tends to be a less volatile measure than the weekly numbers, declined to 345,250 last week from 352,500.

Jobless claims, which track weekly firings, typically fall before job growth, measured by the monthly non-farm payrolls report, can accelerate. Employers added 175,000 jobs in May.

“Initial unemployment claims, by definition, tell us more about lay-offs than about hiring. Still, they provide some evidence of improvement in the labour market and will keep Fed taper talk alive,” said Jill Brown, economist at Credit Suisse.

“As long as hiring continues near or above its current pace, and as long as inflation expectations remain relatively steady, we still expect the Fed to scale back the size of its asset purchase programme this year,” she added.

The number of people continuing to receive jobless benefits increased by 2,000 to 2.97m in the week ended June 1.

The number of job seekers who have used up their traditional benefits and are now collecting emergency and extended aid decreased by about 57,000 to 1.7m in the week ended May 25.

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