Motor Vehicles, Building Materials Lift US Retail Sales In May

• U.S. retail sales unexpectedly rose in May as consumers stepped up purchases of motor vehicles and building materials, which could help to stave off a dreaded recession in the near term.
• The Fed on Wednesday left its policy rate unchanged but signalled in new projections that borrowing costs may still need to rise by as much as half of a percentage point by year-end. "The U.S. economy is holding up relatively well through the second quarter despite some softness," said Robert Kavcic, a senior economist at BMO Capital Markets in Toronto.
• Sales at auto dealers increased by 1.4%. Receipts at building material and garden equipment supplies dealers jumped 2.2%, likely driven by home renovations. There were also gains in sales at furniture stores as well as electronics and appliance outlets. Consumers spent more on hobbies. Online retail sales gained 0.3%. Sales at food services and drinking places rose 0.4%. Economists view dining out as a key indicator of household finances. But cheaper gasoline depressed receipts at service stations.
• Persistently strong demand could push the Fed to raise interest rates next month, though much would depend on June's employment and inflation reports.

(Source: Reuters)