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By Lucia Mutikani / Reuters
June 14, 2016
Shoppers At Malls Ahead Of Consumer Comfort Figures
Pedestrians carry shopping bags while walking through the Grand Prairie Premium Outlets mall in Grand Prairie, Texas, U.S., on Monday, May 23, 2016.
Bloomberg via Getty Images

U.S. retail sales rose more than expected in May as Americans bought automobiles and a range of other goods, suggesting economic growth was gaining steam despite a sharp slowdown in job creation.

The Commerce Department said on Tuesday retail sales increased 0.5% month after surging by an unrevised 1.3% in April. It was the second straight month of gains and lifted sales 2.5% from a year ago.

Excluding automobiles, gasoline, building materials and food services, retail sales rose a solid 0.4% last month after an upwardly revised 1.0% increase in April.

These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously reported to have risen 0.9% in April. Economists polled by Reuters had forecast both overall retail and core sales gaining 0.3% last month.

The fairly strong May retail sales report could see economists raising their second-quarter GDP growth estimates, which are currently around a 2.5% annualized rate. The economy grew at a 0.8% rate in the first quarter.

Tepid employment gains in May stirred concerns about the health of the economy. But so far, data on first-time applications for unemployment benefits suggests labor market strength remains intact.

In May, auto sales rose 0.5% after racing 3.1% in April. Receipts at service stations increased 2.1%, reflecting recent increases in gasoline prices.

Sales at clothing stores increased 0.8%, the largest gain since November. Online retail sales shot up 1.3%. Receipts at sporting goods and hobby stores jumped 1.3% last month. Restaurants and bars sales climbed 0.8%.

Sales at electronics and appliance outlets gained 0.3%. But sales at building materials and garden equipment stores fell 1.8% after declining 2.0% in April. Furniture store sales dipped 0.1%.