New motor vehicle sales jumped 5.4% month on month in May, the biggest increase since early 2005, the Australian Bureau of Statistics said on Monday.

The strength suggests fiscal pump priming and low interest rates continued to support demand in May and could point to another healthy reading for retail sales, Reuters said.

In May, 75,472 vehicles were sold on a seasonally adjusted basis, up from an upwardly revised 71,626 in April. Sales for April were revised to show a 1.7% increase, from 0.9% initially. In trend terms, sales rose 0.1 percent in May, the first increase since January 2008.

May sales were down 12.6% year on year but the annual pace of decline slowed from 20% the previous month.

The ABS report echoed industry data released earlier this month that showed sales bounced in May, from the previous month.