US retail sales, a key growth driver, rebounded in July after two months of decline, the government said Friday, even as Americans still grip tight to their wallets amid a slowing recovery. Retail sales rose 0.4 percent from June to 362.7 billion dollars on the back of strong auto sales, the Commerce Department said.
The July figure was slightly lower than the 0.5 percent rise expected by most economists but it was the first rise in three months after declines of 0.3 percent and 1.0 percent in June and May respectively. Sales rose strongly at auto dealers and gas stations while declines were more widespread, but generally modest outside of department stores, the government data showed. Economists were little impressed by the latest retail data as excluding transactions in auto dealerships and gas stations, "core" sales fell 0.1 percent - reflecting the lackluster state of the world's largest economy.
"Sales remain restricted by weak fundamentals including few new jobs, low income growth, high unemployment, low and volatile wealth, limited access to credit, and low confidence," said analyst Scott Hoyt at Moody's Economy.com. The retail sales trend "underscores the loss of momentum in consumer spending, with no signs of a turnaround to speak of," added analyst Aneta Markowska of Societe Generale. Consumer spending is a key engine of growth for the world's largest economy, facing slowdown in recovery from a brutal recession that struck in December 2007.
The Federal Reserve on Tuesday warned that US recovery would be weaker than anticipated. The central bank said after its policy-making Federal Open Market Committee meeting that it was moving to stimulate the economy, like purchasing US Treasury bonds that will help suppress long-term interest rates.
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