WASHINGTON: American consumers spent at a brisk pace in July, pushing US retail sales to their biggest increase in seven months, according to preliminary figures released on Tuesday (Aug 15).
Auto sales helped drive the mid-summer upswing after sagging for much of the year, posting the biggest gain since December.
Long-suffering department stores likewise showed signs of life, but cheap gasoline and falling sales of electronics and clothing still weighed on sales last month.
Total retail sales rose 0.6 per cent compared to June, with Americans plunking down US$478.9 billion in July, the Commerce Department reported. That was 4.2 per cent above the same month last year.
And sales in June were revised up to show a 0.3 per cent increase, after the initially-reported 0.2 per cent decline.
Analysts, who had been expecting an increase of only 0.3 per cent in July, said the result was a strong start to growth in the third quarter.
The strong showing of the latest two months also might help the case in favor of the Federal Reserve raising interest rates a third time in December - something that had fallen into doubt amid other weak economic data and low inflation.
Strong points in the advance retail sales report for July included the 1.2 per cent jump in sales of autos and building materials.
But gasoline station sales fell gain, dipping 0.4 per cent, although the decline slowed sharply from the 1.5 per cent drop in June.
Excluding cars, retail sales still rose 0.5 per cent, while leaving out the volatile gasoline segment, sales were up 0.7 per cent.
"Stronger retail sales puts the Fed back on track to hike in December," Chris Low of FTN Financial said in a research note.
The strong auto sales came despite industry reports which showed car and truck sales fell six per cent from July 2016.
Meanwhile, department stores had their best month since January, rising a full percentage point over June, perhaps easing some fears that brick-and-mortar outlets are facing collapse as consumers switch to internet shopping.
Still, July was even better for the non-store retailers like Amazon and Jet that have soared in recent years, and increased 1.3 per cent compared to June, also their strongest gain since December.
The improved sales are "providing further evidence of consumers' willingness to open their purses for non-essentials due to better confidence in personal finances and the economy," said Mickey Levy of Berenberg Capital Markets.