U.S. retail sales rise; weekly jobless claims steady

STORY: U.S. retail sales unexpectedly rose in May, another sign of consumer resiliency amid fears of a slowing economy.

Data released by the Commerce Department on Thursday showed retail sales increased 0.3%. Economists polled by Reuters had expected sales to slip by 0.1%.

Sales of automobiles increased 1.4% - jumping a full percentage point from the month before. Building materials and gardening equipment gained 2.2%. And furniture, electronics and appliance stores – which were all down in April – bounced back with positive gains in May.

Sales at restaurants and bars, the only services category in the report, also rose.

Consumer spending accounts for more than two-thirds of U.S. economic activity. May’s number, while down slightly from April, comes even as inflation and higher interest rates are causing consumers to be more selective and sensitive to prices.

Spending has remained resilient thanks to strong wage gains resulting from a tight labor market.

But the labor market is starting to show signs of weakness. A separate report from the Labor Department on Thursday showed initial claims for state unemployment benefits last week were unchanged from the week before at 262,000.

That's more than what economists polled by Reuters had expected, forecasting 249,000.

The unemployment rate, however - now at 3.7% - is still low by historical standards, with an average of 1.8 jobs open for every unemployed person.