In May, Japanese retail sales exceeded estimates as people easedtheir purse strings, but underlying consumption trends remain hampered by COVID-19-relatedfactors, implying that the economic recovery would take time to gain traction. 

After lengthy coronavirus emergency curbs damaged the economicprospects, analysts estimate Japan's economy will barely grow in the secondquarter as it prepares to host the Olympic Games next month. find out more 

The sluggish growth rate in Japan is pressing policymakers to takemore supporting measures on top of the large existing stimulus to promotedemand, as big global economies such as the United States return quickly from the COVID-19 collapse. 

Retail sales increased 8.2 percent in May compared to the same montha year ago, according to official data released on Tuesday. This was higherthan the median market projection of 7.9 percent growth. 

Despite a stronger-than-expected rise in retail sales, TakeshiMinami, chief economist at Norinchukin Research Institute, said the increasewas not significant enough to signal a clear move toward a more optimistic outlook for spending conditions. 

"Many senior people were unlikely to go out and spend money inApril and May since there were still emergency or quasi-emergency measures inplace (in major areas)," Minami explained. 

"It's difficult to believe that the Olympics will spark ashopping frenzy," he said, adding that there was still a chance thatCOVID-19 infections will resurface, putting a damper on consumption. 

The data revealed that year-on-year increases in spending onproducts like general merchandise, apparel, vehicles, and fuel supported thebroader rise in retail sales, which was mostly due to statistical base effects that reflected last year's fall. 

However, on a seasonally adjusted basis, retail sales fell 0.4percent from the previous month, indicating that the Japanese consumer spendingtrend was fading. 

Separate statistics revealed that the seasonally adjustedunemployment rate in the United States increased to 3.0%, up from 2.8 percentthe previous month and above the median prediction of 2.9 percent. 

According to labor ministry figures, there were 1.09 jobs perapplicant in May, which was unchanged from April. 

According to the most recent Reuters poll data, the world'sthird-largest economy is expected to grow by an annualized 0.5 percent in thecurrent quarter, following a steep 3.9 percent annualized drop in January-March.