Page last updated at 13:59 GMT, Wednesday, 13 August 2008 14:59 UK

Car sales fall hits US spending

General Motors vehicles
Sales of vehicles and parts have fallen sharply as fuel prices have risen

Consumer spending in the US fell by 0.1% in July compared with June, driven down by a large drop in car sales.

Vehicle and parts sales fell 2.4%, their biggest monthly drop since April and down 10.5% on July 2007.

Rising food and fuel prices are squeezing consumer spending and cutting demand for expensive items such as cars, whose running costs have risen.

However, according to the government estimates, retail sales were still 2.6% higher than in July 2007.

Economists said there were signs that tax rebates had encouraged some additional spending.

"In July we saw a rebound in furniture sales and electronics after a drop in June. So the tax rebates may have helped a little, but not every aspect of consumer spending," said senior economist Gary Thayer, from Wachovia Securities.

The US government sent tax rebate checks for $168bn to most US taxpayers during the month of July to help stimulate the economy.

Mixed picture

The data showed a mixed picture across the retail sector.

Furniture stores, which have suffered from a slowdown in the housing market, rose by 1 percent in July after a 1.2% decline in June.

Department stores enjoyed a 0.3% rise in sales in July, but restaurants and bars suffered a 0.2% fall in sales.

Elsewhere, department store chain Macy's said its same-store sales fell 2.1% in the three-month period to 2 August.

Its chairman Terry J. Lundgren, said the company "delivered strong second quarter earnings and cash flow, despite the poor economic environment".

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Sign in

BBC navigation

Copyright © 2017 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific