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[Russ]

U.S. Retail Sales Rose More Than Forecast in May (Update2)

By Joe Richter

June 13 (Bloomberg) -- Retail sales in the U.S. rose by the most in more than a year in May, easing concern that record gasoline prices and falling home values would damage consumers.

The 1.4 percent increase was more than twice the median forecast in a Bloomberg survey of economists and followed a revised 0.1 percent drop the prior month, the Commerce Department said today in Washington. Purchases excluding automobiles rose 1.3 percent.

More jobs and rising wages are cushioning the blow from the jump in fuel costs and the slump in real estate, economists said. Resilient consumer spending, along with a pickup in business investment and manufacturing, suggests the economy is poised for stronger growth this quarter.

``The consumer is holding up very well in the face of the energy-price shock,'' said Dean Maki, head of U.S. economic research at Barclays Capital Inc. in New York. The report ``will ease concerns about the downside risks to growth.'' Maki forecast sales would rise 1 percent, matching the highest estimate of economists surveyed.

Prices of goods imported into the U.S. rose a greater-than- forecast 0.9 percent in May on higher prices for oil and industrial supplies, according to a Labor Department report issued at the same time. The jump in prices renewed concern that inflation may accelerate.

Treasury securities dropped in the minutes after the reports before rebounding. The yield on the benchmark 10-year note fell to 5.26 percent at 8:48 a.m. in New York, from 5.30 percent late yesterday.

The 0.9 percent increase in the import price index followed a 1.4 percent gain in April, the Labor Department reported today in Washington. Prices excluding petroleum rose 0.5 percent and prices of consumer goods were unchanged.

Exceeded Forecasts

Retail sales were projected to rise 0.6 percent after an originally reported 0.2 percent decline the prior month, according to the median estimate in a Bloomberg News survey of 77 economists. Estimates ranged from gains of 0.3 percent to 1 percent. Retail sales account for almost half of all consumer spending.

[OEXCHAOS]

That's bad news. Maybe we can get some slowing news elsewhere to help this thing bottom. We do NOT want to see economic strength right now. Mark

[Russ]

Furtures is taking it as good news...up 8.25 currently....but can it get past the 38% retrace line??