U.S. retail sales growth last month was slower than expected, according to data released Thursday, as consumers remained reluctant to spend due to high energy costs and a soft labour market.
The U.S. Department of Commerce reported Thursday that retail sales in July rose by 0.7 per cent from June to US$336.5 billion.
The consensus among economists was for a healthier gain of 1.2 per cent.
Retail sales is a key barometer of the U.S. economy since consumer spending accounts for two-thirds of all economic activity.
The bright spot in Thursday's report was that the Commerce Department revised its earlier retail sales figure for the month of June, to a decline of only 0.5 per cent from 1.1 per cent.
The latest sales figures back up recent comments by Federal Reserve chairman Alan Greenspan that the recovering U.S. economy has gone through a "soft patch" in recent months. Mr. Greenspan has said he believes economic activity should pick up again heading into the fall.
Confident that the U.S. economic recovery is on track, the Fed raised its key overnight lending rate for the second time in six weeks on Tuesday. Its key rate now stands at 1.5 per cent after the two rate hikes, up from one per cent. The recent rate hikes by the Fed were the first in four years.
Sales of cars accounted for much of July's gain in retail sales. Excluding autos, retail sales were up only 0.2 per cent. Analysts expected an increase closer to 0.4 per cent sans autos.
Sales for motor vehicle and parts dealers rose by 2.4 per cent last month and vehicle sales took 2.6 per cent.
Other durable goods, or manufactured items meant to last three years or more, were also stronger in July. Furniture sales rose 1.1 per cent and electronics and appliance sales edged up 0.2 per cent.
Sales of general merchandise gained one per cent and sporting goods, music, book and hobby retailers saw sales climb 1.3 per cent.
One weak spot was clothing sales thanks to poor summer weather in some areas of the country. Clothing retailers reported an overall decline of 0.1 per cent. Poor weather was also blamed for a 1.1-per-cent decline in sales at building materials and garden equipment stores.
