US retail sales rebounded in July but posted a smaller-than-expected gain while lines for jobless benefits shrank for a second straight week, government reports showed on Thursday.
The Commerce Department said retail sales rose 0.7 percent in July to a seasonally adjusted $336.50 billion, less than economists had expected but a rebound from the revised 0.5 percent decline in sales in June.
July purchases excluding autos were up only 0.2 percent, their smallest gain since an outright decline in April. Ex-auto sales in June were revised to a 0.3 percent gain from a 0.2 percent drop.
Wall Street analysts had expected a stronger gain of 1.1 percent in July and a 0.4 percent increase outside of auto sales.
The retail figures reflected a mixed picture of consumer spending, which accounts for about two-thirds of overall US economic activity. With June sales revised up from the previously reported 1.1 percent decline, the "soft patch" in spending noted by Federal Reserve Chairman Alan Greenspan and others was not as deep as believed.
However, the smaller-than-expected July rebound showed shoppers still trying to cope with higher energy prices and stagnant wage growth.
The June retail numbers, along with another report Thursday from Commerce on business inventories, likely mean a boost to estimates of second-quarter growth. Commerce said business inventories grew 0.9 percent in June, their biggest gain in four years.
Second-quarter growth was initially reported as slowing to a 3.0 percent pace from the first quarter's 4.5 percent clip.
In the retail report, auto sales, boosted by hefty incentives from car makers, surged 2.4 percent in July, making up most of June's 3.0 percent fall. Sales at furniture and sporting goods stores also rose.
Gas station sales actually fell 0.5 percent, their biggest decline since October 2003. Economists had expected the dip, however, reflecting somewhat softer prices for gasoline in July. Overall retail sales excluding both cars and gasoline were up 0.3 percent in July and June.
Wal-Mart Stores Inc, the world's largest retailer, on Thursday reported higher-than-expected quarterly earnings as demand for back-to-school clothes and other high-profit items made up for sluggish summer sales.
BUSINESS INVENTORIES RISE: Inventories at US businesses rose more than expected in June, marking their largest gain in four years and their tenth consecutive monthly rise, a government report showed on Thursday.
The Commerce Department said June business inventories rose 0.9 percent to $1.234 trillion while sales at manufacturers, retailers and wholesalers grew 0.1 percent. Wall Street economists had expected a milder 0.5 percent rise in June stocks.
The June business inventory gain, the largest since a matching rise in June 2000, pulled a key measure of inventory leanness from recent lows. The stock-to-sales ratio, which measures how long it would take to deplete stocks at the current sales pace, rose to 1.31 months in June from 1.30 months in May.
JOBLESS CLAIMS DIP: The number of Americans filing first claims for jobless pay dropped by 4,000 last week, a second straight weekly decline that appeared to reflect improving job prospects.
Initial jobless claims dipped to 333,000 from 337,000 in the previous week, the Labour Department reported on Thursday, contrary to Wall Street economists' expectations that they would rise to 338,000. The department originally reported claims in the July 31 week totalled 336,000 but it revised that number up modestly.
The four-week moving average of claims, closely watched because it is considered likely to iron out weekly fluctuations in the numbers, also declined last week. It fell to 339,250 from 343,500 in the July 31 week.
The trend downward in both initial and average weekly claims implied a potential brightening in the job picture, an encouraging sign after last week's employment report that showed only 32,000 new jobs were created in July, far short of expectations.
The number of people who continued to collect unemployment benefits during the July 31 week - the latest week for which the data was available - was down by 5,000 from a week earlier to 2.9 million.