USA stocks flat but retail sales lift dollar

USA stocks flat but retail sales lift dollar

The report "shows households still had plenty of buying power as the third quarter got under way in July", MarketWatch said, noting that "Steady hiring, the lowest unemployment rate in 16 years and gently rising incomes have all buoyed spending in 2017, keeping the economy on a modest growth path more than eight years after an expansion took hold".

Consumer spending accounts for about 70 percent of economic activity.

Sales in May and June were also revised higher, signalling that months of sluggish consumer spending may have come to an end, a report by the commerce department showed.

Consumers boosted purchases of motor vehicles as well as discretionary spending, increasing the Commerce Department's reading on sales by 0.6 percent.

The weaker dollar ensured USA retailers of overseas goods were not importing inflationary pressures, as the import price index rose at a monthly pace of 1.5% in July, the same as June's reading.

Economists have been expecting the USA economy to pick up steam in the second half of the year and that view got some support from the latest retail sales report - with a bit of help from Amazon. Not only did the July numbers comfortably beat expectations but the June numbers were also revised higher, providing an additional boost for dollar bulls.

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Long-suffering department stores likewise showed signs of life, but cheap gasoline and falling sales of electronics and clothing still weighed on sales last month.

Building materials and supplies stores increased 1.2 percent over June and increased 8.5 percent unadjusted year-over-year.

Health and personal care stores increased 0.4 percent over June and increased 1.6 percent unadjusted year-over-year. Contributing $2.6 trillion to annual GDP, retail is a daily barometer for the nation's economy. Industry experts noted that online sales likely received a lift from Amazon.com's Prime Day promotion.

Still, July was even better for the non-store retailers like Amazon and Jet that have soared in recent years, and increased 1.3 per cent compared to June, also their strongest gain since December.

Excluding cars, retail sales still rose 0.5 per cent, while leaving out the volatile gasoline segment, sales were up 0.7 per cent.

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