US July retail sales up 0.3 percent, beat forecasts

Aug 13, 2007 - Sales at U.S. retailers rose a slightly more-than-expected 0.3 percent in July and they were even stronger once car and gasoline sales were stripped out, Commerce Department data showed on Monday.

Excluding autos, retail sales gained 0.4 percent in July as forecast and the prior month was revised to a 0.2 percent decline versus a 0.4 percent fall initially reported.

Economists polled by Reuters forecast overall retail sales to rise 0.2 percent compared with a revised 0.7 percent drop in June, previously reported as a 0.9 percent drop.

Stock index futures extended gains, the dollar pared losses against the yen and the prices on U.S. government treasury bonds retreated after the data eased concerns over slowing U.S. growth and the health of the consumer.

"Not only did the month of July come in a little stronger than expected, but June was revised upward to reflect less of a decline which will be good for the stock market," said Richard Huber, an economist at A.G. Edwards and Sons in St. Louis.

So-called core retail sales, which exclude cars, gasoline and building materials, were up 0.6 percent from a 0.3 percent gain in June.

Purchases of motor vehicles and parts, which make up around one fifth of total sales, fell 0.3 percent. Gasoline, which can have a big impact on consumer spending, fell 0.8 percent.

Economists had also expected a strong U.S. jobs market to support consumption, despite the impact of cooling U.S. housing and turmoil caused by problems in the market for subprime mortgages for borrowers with risky credit.

In fact, furniture and home furnishings sales rose 0.5 percent and building material and garden supplies were up 0.2 percent.

Sales of clothing and accessories jumped 1.3 percent, while sales at food and beverage stores, health and personal care also advanced.

The reported strength was somewhat at odds with the news from U.S. retailers, who had generally announced disappointing sales in July. Wal-Mart Stores Inc, the world's largest retailer, reported a 1.9 percent rise in July sales at U.S. stores but said it had cut prices to attract shoppers.