U.S. retail sales surge in July

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17 August, 2017

Retail sales increased 4.2 per cent in July on a year-on-year basis.

The dollar rose by more than 1 percent against the Japanese yen, touching its highest in more than a week and on pace for its largest daily rise against the yen since June.

Non-store retailers, which includes online shopping, reported sales increased 1.3% in July from the month before, while recording a whopping 11.5% compared to July 2016.

Michael Pearce, at Capital Economics, said: "Consumption began the third quarter on a strong footing".

The July retail sales report was strong overall, and so was the core retail sales, which goes into the calculation of GDP, according to Eugenio J. Alemán, senior economist at Wells Fargo Securities.

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"The decline in the saving rate, however, raises some longer-term concerns about consumer spending", said Michael Feroli, an economist at JPMorgan in NY.

It earlier touched its highest level since July 26. Faced with a huge inventory of unsold cars, auto dealerships are resorting to hefty discounts to attract buyers. 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.

That helped boost sales of so-called nonstore retailers by 1.3% last month, the largest increase since December.

Health and personal care stores increased 0.4 percent over June and increased 1.6 percent unadjusted year-over-year. Industry experts noted that online sales likely received a lift from Amazon.com's Prime Day promotion.

Furniture and home furnishings stores outperformed the broader retail sector with a 5.6% jump in sales over the same month previous year, according to the latest government report. The general trend of retail sales still remains worrying, despite the improvement over the last couple of months and 2% inflation still looks a pipe dream. Sales at clothing stores fell 0.2 per cent after rising 0.7 per cent in June.


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