Mild upturn for US retail sales

Buoyant consumer spending is vital to the health of the US economy

US shoppers returned to the malls in July, but rising fuel prices left retail sales only modestly higher.

Sales rose 0.7% in July to a seasonally adjusted $336.5bn (£183bn) - less than economists had predicted but far better than the previous month's 0.5% drop.

The "soft patch" in spending described by Fed chairman Alan Greenspan was not as deep as many had feared.

However, consumers were still trying to cope with higher energy prices and stagnant wage growth.

Car sales surged by 2.4% in July, making up for June's 3% fall, after car makers offered cheap deals to boost flagging sales.

However, when automobile sales are excluded, sales rose by just 0.2%, the Commerce Department said.

Temporary blip?

With June's sales figures being revised upwards, it now appears that the month was not quite the disaster that some economists had feared.

June's retail sales figure was revised to a 0.5% decline from previous estimates of a 1.1% drop.

And when car sales figures are stripped out, June's sales rose 0.3% against a previously reported fall of 0.3%.

Consumer spending accounts for about two-thirds of overall US economic activity.