Receipts are expected to rise 0.6 percent, marking an improvement over the prior month’s 0.3 percent decline. Investors and economists have been looking for the consumer to drive the economy, particularly as about 70% of gross domestic product comes from the consumer spending component.
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“The consumer-driven recovery of the economy continues on track”, said Harm Bandholz, chief U.S. economist at UniCredit Group in New York, who correctly projected the gain in sales.
Americans bought more cars, restaurant meals and building supplies in July, as the spending points to steady economic growth anchored by the improving job market.
Retail sales have been choppy in recent months, though they are generally inching upward, growing 2.4 per cent in the year through July.
The June uptick matches economists’ forecast of an 0.6% rise in retail sales, according to a survey by FactSet. GDP expanded at a 2.3 percent annual pace in the April-June quarter. When prices drop and the dollar becomes cheaper relative to other currencies, consumers might be buying the same amount of items even if they’re spending less money.
The Labour Department also reported that initial claims for state unemployment benefits increased 5,000 to a seasonally adjusted 274,000 for the week ended August 8.
The retail sales data added to fairly strong July employment and small business confidence reports in suggesting steady economic momentum at the start of the third quarter. Another report from the Department of Commerce showed a jump of 0.8% in business inventories during June that suggest growth during the second quarter was also stronger than was initially estimated.
Retail sales account for about one-third of shopper spending, the primary engine of U.S. financial exercise….
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However, excluding the rebound in auto sales, the Commerce Department said retail sales still climbed by 0.4 in July. Sales at stores that sell sporting goods, hobby materials, books and music rose 0.9%.
