U.S. retail sales increased less than expected in May as lower prices for gasoline and motor vehicles weighed on receipts at service stations and auto dealerships.
Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, gaining 0.3 per cent in May. Retail sales have in recent months been distorted by an early Easter. Banks are also tightening access to credit as lower income borrowers increasingly struggle to keep up with their loan payments. Though the labor market remains on a solid footing, it is becoming a bit difficult for people who lose their jobs to quickly find new work and wage increases are moderating.
The Federal Reserve last week kept its benchmark overnight interest rate in the current 5.25 per cent-5.50 per cent range, where it has been since last July. U.S. central bank officials pushed out the start of rate cuts to perhaps as late as December, with policymakers projecting only a single quarter-percentage-point reduction for this year. They, however, maintained their gross domestic product growth estimates.