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Economic Watch: Retail Sales Gains Push GDP Hopes Higher

Economic Watch: Retail Sales Gains Push GDP Hopes Higher”

USA retail sales advanced in July by the most this year, with widespread gains from department stores to building materials outlets that signal a robust start to consumer spending in the third quarter, according to Commerce Department figures released Tuesday. USA stock index futures were trading higher.

Clothing and accessories stores decreased 0.2 percent seasonally adjusted from June but increased 0.1 percent unadjusted year-over-year. The Swiss franc extended its losses after shedding about 1.1 percent against the dollar on Monday, its biggest daily fall since July 27.

"Consumer spending remains solid as retail sales saw healthy improvements in July and revised June numbers were also positive", NRF Chief Economist Jack Kleinhenz said. The nation's gross domestic product (GDP) increased at an annual rate of 2.6% in the second quarter, up from the 1.2% pace in the first quarter of the year. "Savings can't drop indefinitely and future consumption growth will need to rely on stronger income growth".

The index of business activity rose to a three-year high of 25.2, a striking gain on July's 9.8 and well clear of the consensus estimate of 10. Faced with a huge inventory of unsold cars, auto dealerships are resorting to hefty discounts to attract buyers. Sales at online retailers vaulted 1.3 per cent in July, the largest gain since December 2016, likely buoyed by Amazon.com's Prime Day promotion. Prices could decline further as a separate report from the Labor Department on Tuesday showed the cost of imported motor vehicles fell in July for the second consecutive month.

Sales at electronic stores also fell slightly, but in all likelihood consumers merely shifted purchases to online retailers such as Amazon. Americans increased spending last month on most goods except for clothes and gasoline.

The US dollar got a boost on Tuesday after data showed retail sales in the US held up well in July, while a measure of business activity among NY state's manufacturers rose at its fastest pace in three years.



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