Washington, August 12--Retail sales rose 0.7% in July, the Commerce Department reported. June sales were revised to a 0.5% drop from the initial estimate of a 1.1% decline.
A 2.4% gain in motor vehicles and parts demand helped push up overall retail sales. Data last week had showed higher U.S. auto sales for the month; one reason is that auto makers offered more generous incentives. Without the auto component, retail sales would have gone up only 0.2%, from a 3% drop a month earlier.
Economists had expected bigger increases of 1% and 0.3%, for overall retail sales and sales excluding autos, respectively, according to a survey by Dow Jones Newswires and CNBC.
While the increase was below expectations, it did show people elevated their spending in July. The economy slowed in the second quarter as consumer spending decelerated sharply. But Federal Reserve policy makers, in raising interest rates for the second time in six weeks, suggested the economy seemed ready to climb out of the "soft patch," as Fed Chairman Alan Greenspan put it.
In addition to the rise in auto sales, demand climbed at furniture stores, food and beverage stores and electronics stores. Sales at gasoline stations fell, as did those at building-materials and garden stores, health and personal-care stores, and clothing stores.
