Beating Wall Street expectations, retail sales increased in May, driven by stronger automobile purchases, and helped support retail sector exchange traded funds Thursday.
The SPDR S&P Retail ETF (NYSEArca: XRT) gained 1.2% Thursday. The ETF is up 23.3% year-to-date, compared to the 14.2% gain in the broader S&P 500 Index. [Cyclical Sector ETFs Can Perform in a Rising Rate Environment]
Retail sales rose 0.6% over May, the strongest in three months, with car sales up 1.8% for the month, reports Tim Mullaney for USA Today. Excluding auto purchases, retail sales was 0.3% higher over the month.
The First Trust NASDAQ Global Auto Index Fund (NYSEArca: CARZ) was also up about 1% during midday trading Thursday.
“This was a pretty good report which clearly shows that households are still spending at a decent pace,” Joel Naroff, president of Naroff Economic Advisors, which consults for regional banks and other clients, said in the USA Today article. “People don’t buy SUVs if they are worried about making the payments and they don’t seem to be overly concerned about that right now.”
The Labor Department also revealed lower jobless claims earlier Thursday.
“The consumer seems to be faring very well,” Brian Jones, senior U.S. economist at Societe Generale, said in a Bloomberg article. “The labor market is getting better. People realize that the employment situation has improved so they feel better and are probably willing to go out and spend money.”
Barclays economists have raised their second-quarter growth forecasts to an annual rate of 1.8% from 1.1%, pointing to the better-than-expected economic data.
SPDR S&P Retail ETF
For more information on the retail sector, visit our retail category.
Max Chen contributed to this article.