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U.S. stores and factories reported a pickup in activity last month, suggesting the economy is humming along without an urgent need for the Federal Reserve to cut interest rates.

Retailers posted a broad-based gain, with the value of overall sales rising 0.5% from April, and figures for the previous two months were revised higher. Manufacturing output also increased for the first time this year.

Treasuries fell and the dollar rose on the data, which signaled that spending by American consumers – the economy’s main driver – is holding up amid low employment and rising wages, while manufacturers aren’t too demoralized yet by President Donald Trump’s trade war. Less upbeat numbers for payrolls and inflation in the past week led many investors to increase bets that the Fed will lower borrowing costs in the next couple of months.

“Today’s report was a bit of relief for the Fed. It takes out a sense of urgency for them to act,” said Michelle Meyer, head of U.S. economics at Bank of America Corp. “The trend in the last three months for consumer spending was quite solid following the first quarter where it was soft.”

As well as the May gain, retail sales in April were revised to a 0.3% increase, according to Commerce Department figures released on Friday. Out of 13 major categories, 11 saw increases.

Sales in the “control group” subset, which some analysts view as a more reliable gauge of underlying consumer demand, climbed 0.5%, topping projections. The measure excludes more volatile items like food services and fuel stations.

In a separate report Friday, the Fed said that manufacturing output rose 0.2% in May – in line with estimates in a Bloomberg survey – after falling 0.5% the month before. Total industrial production, which also includes mines and utilities, increased 0.4%.

While the Friday reports cleared some of last week’s clouds, Meyer said that there are still risks from abroad that could spill into the U.S. economy.

Investors are pricing in a July Fed rate cut as highly likely, although they did trim their bets slightly on Friday. Chairman Jerome Powell will give more insight into the Fed’s thinking at a press conference Wednesday following a two-day meeting of policy makers.

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The retail pickup was led by a 1.4% gain in non-store sellers, the most since January. That includes online shopping destinations such as Amazon.com.Sales at automobile and parts dealers advanced 0.7% after a decreasing 0.5% in the previous month, revised upward from a 1.1% drop. Industry data from Wards Automotive Group previously showed unit sales rebounded in May.Excluding automobiles and gasoline, retail sales increased 0.5% after a 0.3% gain the previous month, which was revised from a decline.

With assistance from Chris Middleton, Sophie Caronello and Benjamin Purvis.

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