A GAUGE of US consumer spending rose in July at its fastest pace in seven months, a sign of quicker economic growth that could strengthen the case for the US Federal Reserve winding down its economic stimulus programme.
Other data yesterday showed US small business optimism improving in July, while import prices rose less than expected during the month and inventories at US businesses were flat in June.
Retail sales outside of cars, gasoline and building materials rose 0.5 per cent last month, the Commerce Department said. That reading is a key component of the department's measure of consumer spending, which drives the US economy.
July’s gain in core retail sales was the largest since December, and suggests the economy could be regaining steam after tax hikes and federal budget cuts dragged on growth in the first half of the year.
“This number (for retail sales) should keep the Fed on track to curtail quantitative easing purchases in September,” said Joseph Trevisani, chief market strategist at WorldWideMarkets in Woodcliff Lake, New Jersey.
In a further sign that economic activity could accelerate in the second half of the year, the National Federation of Independent Business showed sentiment improved among small business owners in July.
City A.M. Reporter