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Sales rose by a better-than-expected 1% in May, the Commerce Department said, the largest rise since November.

It also said April's figure had been revised up to a rise of 0.4% against the previous estimate of a 0.2% fall.

Economists said the rise indicated that the economy had been given a boost by the stimulus package under which millions of Americans got tax rebates.

Core retail sales, which exclude car sales, rose 1.2%, the Commerce Department said.

Analysts had predicted that retail sales would rise by 0.6% and core retail sales would grow by 0.7%

Consumer spending is the key driver of US economic growth.

The stimulus payments were introduced to try to avoid a recession in the US by offsetting some of the gloom brought on by the credit crisis, housing market slump and surging energy bills.

The economy has also been hit by redundancies. Labor Department data released on Thursday showed that the number of new applications for unemployment benefits rose by 25,000 last week to 384,000 - the highest level since March and more than analysts had expected.

(BBC)

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