Buyers’ wallets open up in July

Spending jumps a brawny 0.6%

WASHINGTON — Consumers went out shopping in a big way in July, pushing up retail sales by the largest amount in seven months.

Retail sales advanced 0.6 percent last month, the best showing since a gain of 0.9 percent last December, the Commerce Department reported Tuesday. For most of this year, retail sales have been lackluster, including a decline in May of 0.2 percent and a modest 0.3 percent June gain.

Consumer spending accounts for around 70 percent of economic activity, so the latest result is a good sign for overall economic growth.

“Consumer spending has perked up,” said Ryan Sweet, an economist at Moody’s Analytics in West Chester, Pa. “There’s really not a lot to complain about in this report.”

Michael Pearce, U.S. economist at Capital Economics, said the strong gain in July sales showed that consumer spending was off to a good start for the third quarter.

“With the labor market still adding jobs at a rapid pace, consumption growth looks set to remain strong for at least the rest of this year,” Pearce said.

Sales were helped in July by a 1.2 percent jump in auto purchases, the strongest result since December. There were sales gains in other areas as well, including furniture stores, hardware stores and restaurants.

The overall economy, as measured by the gross domestic product, grew at a 2.6 percent annual rate in the April-June quarter, a significant rebound from growth of just 1.2 percent in the first quarter. Economists are looking for growth to remain strong in the current July-September period, although some forecast a slight slowdown from the second quarter pace.

They ongoing strong gains in employment will add further fuel to consumer spending. The unemployment rate in July dropped to a 16-year low of 4.3 percent.

For July, sales of furniture, hardware and building supplies and sporting goods were all up. Sales at general merchandise stores posted a tiny 0.1 percent gain. Sales by nonstore retailers, the category that tracks Internet commerce, posted a strong gain of 1.3 percent. Online shopping has been making major inroads over traditional brickand-mortar stores.

Pearce said that the surge in online sales reflected in part Amazon’s Prime Day promotion event ,which increased U.S. orders for the giant Internet shopping company by 50 percent compared with the same event last year.

The retail sales data capture just under half of all household purchases. Because the figures aren’t adjusted for prices, the results may look even stronger when declining goods costs are taken into account, according to Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez. Electronics merchants, gasoline service stations and clothing chains were the only categories to post a drop.

U.S. businesses increased

their stockpiles in June by the largest amount in seven months, while sales also rose.

The Commerce Department said business inventories rose by a seasonally adjusted 0.5 percent in June, following May’s gain of 0.3 percent. It was the best showing since inventories had risen 0.9 percent in November.

When businesses increase stockpiles, it is generally seen as a sign of their confidence that sales will increase in the coming months. A decrease in inventories can be a sign of pessimism about future sales.

Economists expect that inventory growth will strengthen further in coming months and help support overall economic expansion.

Wholesalers led the way in June with 0.7 percent gains in both sales and inventories. Retailers’ inventories increased by 0.6 percent last month, while sales grew by 0.3 percent.

Manufacturers’ inventories rose 0.2 percent in June, but sales fell 0.2 percent.