June 13 (Bloomberg) -- China's retail sales growth stayed close to the fastest pace in at least nine years in May as incomes climbed, underscoring the country's economic strength amid a world slowdown.

Sales soared 21.6 percent to 870.4 billion yuan ($126 billion) after gaining 22 percent in April, the statistics bureau said today.

The increase was seven times faster than the pace of U.S. retail-sales growth and follows a stronger-than-estimated surge in Chinese exports last month. The nation's deadliest earthquake in 32 years has fed demand, with survivors supplied with 1.1 million quilts, 4.8 million beds and 14 million pieces of clothing, the State Council said yesterday.

``Robust income growth is supporting strong domestic demand,'' said David Cohen, director of Asian economic forecasting at Action Economics in Singapore. ``Like consumers around the globe, the Chinese are seeing their household budgets pinched by inflation -- that doesn't seem to be holding them back.''

The yuan traded at 6.9032 versus the U.S. dollar as of 11:24 a.m. in Shanghai after closing at 6.9075 yesterday.

The median estimate of 22 economists surveyed by Bloomberg News was for a 21.7 percent sales increase. The 7.7 percent rise in consumer prices last month contributed to the gain.

Cars, Jewelry

Automobile sales climbed 32 percent from a year earlier after a 25.7 percent gain in April. Construction materials rose 9.3 percent after a 1.2 percent decline.

Growth moderated in sales of cosmetics, jewelry and household electronics. Japan's Sony Corp. and Sharp Corp. said this month that the nation's somber mood after the May 12 quake in Sichuan province was likely to cool demand for some products.

April's retail-sales gain was the fastest since Bloomberg data began in 1999. The pace of May's increase was even after the government replaced a week-long holiday, introduced in 2000 to boost tourism and consumption, with a three-day break.

China's exports surged 28 percent in May after a 22 percent gain in April. Urban disposable incomes climbed 11.5 percent in the first quarter from a year earlier.

``With consumer-price inflation softening in May, it is not surprising to see nominal retail sales growth following the trend as well,'' said Song Yu and Liang Hong, economists at Goldman Sachs Group Inc. in Hong Kong. ``We expect real consumption to remain firm going forward, supported by firm real wage income growth.''

The central bank said on June 3 that the fastest-growing major economy was shifting from ``heated'' to more stable growth.

The Organization for Economic Cooperation and Development cut on June 4 its forecast for global growth this year to 1.8 percent. It said China's economy will slow to a 10 percent expansion after growing 11.9 percent in 2007.

China's retail-sales growth compares with the 3 percent increase in the U.S. in May from a year earlier, reported by the Commerce Department yesterday.

To contact the reporter on this story: Paul Panckhurst in Beijing at ppanckhurst@bloomberg.net

Last Updated: June 12, 2008 23:37 EDT