USA retail sales soar in July to 7-month high

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"This means that not only is the second quarter personal consumption expenditures probably going to be revised higher from an already strong 2.8%, but that the expectations for PCE during the third quarter are also going to be marked up going forward", he said.

The US consumer continued spending freely in July, particularly on motor vehicles and building materials.

The Commerce Department said retail sales jumped 0.6% in July, the largest gain since December 2016 and an improvement on June's upwardly revised 0.3% rise.

Auto sales helped drive the mid-summer upswing after sagging for much of the year, posting the biggest gain since December last year.

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.

The strong advance in retail sales in July is a good sign for overall economic growth.

Economists have been expecting the USA economy to pick up steam in the second half of the year and that view got some support from the latest retail sales report - with a bit of help from Amazon. Sales excluding autos and gasoline rose 0.5% after a 0.3% rise.

"The number showed broad-based strength, it beat forecasts both on the headline and the core and what was also encouraging was how the number for June got revised from the red back into positive territory", Manimbo said.

Sales also rose 1.2% at auto dealers, 1.2% at home and garden centers and even 1% at department stores that have been losing ground to Internet rivals.

Building materials and supplies stores increased 1.2 percent over June and increased 8.5 percent unadjusted year-over-year. Industry experts noted that online sales likely received a lift from's Prime Day promotion.

However, cheap gasoline and falling sales of electronics and clothing items still weighed on sales last month. There were sales gains in other areas, including furniture stores, hardware stores and restaurants.