WASHINGTON -- U.S. consumers spent more boldly than expected last month as declining gasoline prices shielded household budgets, government data showed on Monday.
Sales at U.S. retailers rose a slightly more-than-expected 0.3 percent in July and core sales that strip out car, building materials and gasoline sales were even stronger, the Commerce Department data showed.
Investors took heart from the news, with Wall Street stocks opening higher. The dollar pared losses against the yen and the prices on U.S. government treasury bonds retreated after the sales data eased concerns over slowing U.S. growth and the health of the consumer.
Excluding autos, retail sales were up 0.4 percent in July as forecast and the prior month was revised to a 0.2 percent decline versus a 0.4 percent fall initially reported.
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Economists polled by Reuters forecast overall retail sales to rise 0.2 percent compared with a revised 0.7 percent drop in June, previously reported as a 0.9 percent drop.
"Not only did the month of July come in a little stronger than expected, but June was revised upward to reflect less of a decline which will be good for the stock market," said Richard Huber, an economist at A.G. Edwards and Sons in St. Louis.
So-called core retail sales, which exclude cars, gasoline and building materials, were up 0.6 percent from a 0.3 percent gain in June.
MOTOR VEHICLE SALES DECLINE
In the retail sales report, purchases of motor vehicles and parts, which make up around one fifth of total sales, fell 0.3 percent. Gasoline, which can have a big impact on consumer spending, fell 0.8 percent.
Economists had also expected a strong U.S. jobs market to support consumption, despite the impact of cooling U.S. housing and turmoil caused by problems in the market for subprime mortgages for borrowers with risky credit.
In fact, furniture and home furnishings sales rose 0.5 percent and building material and garden supplies were up 0.2 percent. Sales of clothing and accessories jumped 1.3 percent, while sales at food and beverage stores, health and personal care also advanced.
The reported strength was somewhat at odds with the news from U.S. retailers, who had generally announced disappointing sales in July. Wal-Mart Stores Inc , the world's largest retailer, reported a 1.9 percent rise in July sales at U.S. stores but said it had cut prices to attract shoppers.
BUSINESS INVENTORIES UP
In other Commerce Department data on Monday, inventories at U.S. businesses rose 0.4 percent in June as forecast.
The gain in stocks at hand followed an unrevised 0.5 percent rise in May. Sales dipped 0.3 percent in June after climbing 1.3 percent the previous month.
Economists monitor the data for clues on whether businesses are building stocks in anticipation of rising demand, although the judgment is tricky since an increase in inventories can also reflect weaker than anticipated sales.
June's inventory-to-sales ratio, a measure of how long it would take to deplete stocks at the current pace of sales, edged up to 1.27 months' worth from 1.26 in May.
The June buildup of motor vehicles and parts at businesses mounted 1.0 percent, posting the category's largest monthly increase since June of 2006, when they jumped 1.3 percent. The U.S. auto industry has been forced to bolster sales through a program of aggressive incentives.
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