A shopper makes a purchase at the JC Penney department store in North Riverside, Illinois, the US. Picture: REUTERS
A shopper makes a purchase at the JC Penney department store in North Riverside, Illinois, the US. Picture: REUTERS

Washington — US retail sales rose more than expected in July as households boosted purchases of motor vehicles and clothing, suggesting the economy remained strong early in the third quarter.

The commerce department said on Wednesday that retail sales increased 0.5% in July. But June data was revised lower, to show sales gaining 0.2% instead of the previously reported 0.5% rise.

Economists polled by Reuters had forecast retail sales nudging up 0.1% in July. Retail sales in July increased 6.4% from a year ago.

Excluding cars, petrol, building materials and food services, retail sales advanced 0.5% last month after a downwardly revised 0.1% dip in June. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

Core retail sales were previously reported to have been unchanged in June.

Consumer spending is being supported by a tightening labour market, which is steadily pushing up wages. Tax cuts and higher savings are also underpinning consumption.

July’s increase in core retail sales suggested the economy started the third quarter on solid footing after logging its best performance in nearly four years in the second quarter.

GDP surged at a 4.1% annualised rate in the April-June period, almost double the 2.2% pace in the first quarter.

While the economy is unlikely to repeat the second quarter’s robust performance, growth in the July-September period is expected to top a 3% rate.

Vehicle sales rose 0.2% in July after edging up 0.1% in June. Receipts at service stations increased 0.8%.

Sales at clothing stores rebounded 1.3% after declining 1.6% in June.

Online and mail-order retail sales increased 0.8%, likely boosted by Amazon’s Prime Day promotion. That followed a 0.7% rise in June. Americans spent more at restaurants and bars, lifting sales 1.3%.

But receipts at furniture stores fell 0.5% and sales at building material stores were unchanged last month.

Spending at hobby, musical instrument and book stores declined further in July, falling 1.7%.

Reuters