American retail sales boost

THE US economy continues to roar with retail sales and productivity outpacing predictions.

American households increased their spending on cars, clothing and other products in July by 0.5pc, more than estimates of 0.1pc and signalling a strong start to the third quarter.

And productivity – the measure of workers’ output per hour – grew at its fastest pace in more than three years, at 2.9pc.

The upbeat official figures came as unemployment hovered near 18-year lows. President Donald Trump has claimed the US is racing into an era of rapid growth – dubbed ‘the American economic miracle’ – thanks to tax cuts and deregulation.

Analysts said the numbers showed confident shoppers were helping to drive strong economic growth. However, enthusiasm on the stock market was dented by trade disputes with China and Turkey, with both hitting the US with tit-for-tat tariffs.

The better- than- expected retail figures in July came despite a rise in June being downwardly revised from 0.5pc growth to 0.2pc. Excluding automobiles, gasoline, building materials and food services, retail sales in July rose 0.5pc after a dip of 0.1pc in June. Year-on-year, retail sales in July were up 6.4pc.

Michael Feroli, an economist at JPMorgan Chase, said in a note to investors: ‘It gives us comfort that consumers are nowhere near to being as overstretched as they were in the years heading into the Great Recession.’

The strong figures are likely to fuel expectations the Federal Reserve will raise interest rates in September, which would be the third time this year.