Sales rose 15.9 percent from a year earlier to 715.8 billion yuan (US$94 billion) after gaining 15.5 percent in April, the statistics bureau said today. That beat the 15.3 percent median estimate of 19 economists surveyed by Bloomberg News.

Premier Wen Jiabao has raised minimum wages and increased welfare spending to raise consumption and curb dependence on exports and investment. China is the world's fastest-growing retail sales market, according to McKinsey & Co.

"The economy is doing well and people are making a lot of money," said Frank Gong, chief China economist at JPMorgan Chase & Co. in Hong Kong. "The stock market's performance also helps, although that only affects a small part of the population."

The gain was the biggest since May 2004 after adjusting for distortions caused by China's Lunar New Year holidays. For the first five months, China's retail sales climbed 15.2 percent from the same period last year to 3.5 trillion yuan.

The value of retail sales in China trails only the US and Japan and is bigger than the rest of Asia excluding Japan combined, according to McKinsey.

Supermarket Sales

China Resources Enterprise Ltd., a state-controlled retailing group, said profit rose 9.8 percent in the first quarter from a year earlier as supermarket sales increased.

Related readings:  Chinese retail sales up 15.5%  Retail sales of hotel, catering sectors up 18%  Make best use of labor to narrow income gap

China's economy, the world's fourth largest, grew 11.1 percent in the first quarter from a year earlier. Disposable incomes in urban areas jumped 19.5 percent and rural households' earnings climbed 15.2 percent. Soaring meat prices may increase rural incomes.

Rising job opportunities also help to buoy consumer confidence. Hang Seng Bank Ltd., Hong Kong's second largest by assets, this month said it will boost the number of branches in China to 50 from 16 and increase its staff to 2,000 from 800.

"The economy is going well," said Billy Ngok, Hong Kong- based chairman of Hembly International Holdings Ltd., a distribution and retailing company. "The consumers are very confident and want to buy."

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