Stimulus Checks Raised Retail Purchases One Percent In May

Washington, D.C. (AHN) - Retail sales showed some positive signs after the Bush administration sent out $57 billion worth of economic stimulus payments, leading consumers to shop at electronics and department stores.

The U.S. retail sales increased by a surprising 1 percent in the month of May, the fastest rise over the period of six months, the Commerce Department reported Thursday.

The sales doubled the rate expected by market analysts. Economists surveyed by Dow Jones Newswires had estimated a 0.5 percent increase.

The report showed that the sales in April were revised upwards by 0.4 percent, which was down by 0.2 percent, and in March it increased 0.5 percent compared to its earlier rise of 0.2 percent.

The retail sales report is a crucial economic indicator of the U.S. economy as well as consumer spending, which contributes up to 70 percent of the overall gross domestic product.

Excluding gasoline, purchases still increased by 0.8 percent last month.

The Bush administration had awaited the results of its stimulus package, designed to boost consumer spending.

Payments started going out April 28th and the checks will be received by taxpayers until July with payments ranging from $600 for singles to $1200 for married couples.

Some of parents will receive an additional $300 for each qualifying child born after Dec 31, 1990.

According to the report, sales of motor vehicles rose by 0.3 percent in May after dropping 2.1 percent in April.

All other retail purchases, excluding automobile and parts dealers, increased by 1.2 percent last month. Sales at building supply and garden stores rose 2.4 percent.

General merchandise stores gained by 1.2 percent, which is the largest increase at general merchandise stores in 14 months.

Online and catalog purchases rose 1.6 percent, a possible result of higher gas prices.

Domestic prices in U.S. dollars are mainly affected by the import prices, which surged by 2.3 percent in May, according to the Labor Department on Thursday, compared to the revised reading of 2.4 percent in April.

U.S. export prices increased by 0.3 percent on a monthly basis in May from April. Import prices at an annual rate were at 8 percent.

U.S. weekly initial jobless claims for insurance increased by 25,000 to 384,000 on a seasonally adjusted basis in the week ending June 7, according to the Labor Department on Thursday.