US retail sales rebound in July

US shoppers are proving more resilient than some feared

US retail sales rebounded more than expected in July, giving a welcome boost to an economy concerned about ongoing woes in the mortgage market.

Overall sales at US retailers rose 0.3% last month, compared with June's 0.7% drop, and better than the expected 0.2% rise, said the Commerce Department.

Retail sales account for more than two-thirds of the US economy.

There had been fears that the figures would be hit by the ongoing weakness in the American housing market.

Sub-prime woes

Higher interest rates have weighed on the property market and in particular on the so-called sub-prime mortgage sector, which specialises in high risk, higher interest loans to people with a poor credit history or on low wages.

As interest rates have risen, a growing number of sub-prime lenders have defaulted on their payments, leading to record numbers of home repossessions, and causing significant financial difficulties for investment funds exposed to the sector.

The core retail sales figure - which pulls out building materials - cars and petrol rose to 0.6% in July from 0.4% in June.

Analysts broadly welcomed the figures, but said their main focus remained the ongoing fears over the mortgage sector.