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Signs of caution as US retail sales rise

Nikhil Kumar
Saturday 14 August 2010 00:00 BST
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US retail sales reversed course and booked a positive performance last month, but underlying data continued to paint a lacklustre picture of consumer spending in the world's largest economy.

Sales were up 0.4 per cent over July, compared with a revised 0.3 per cent drop over June, according to the US Commerce Department. Though firm, last month's figures failed to meet market hopes of a 0.5 per cent gain over July.

More worryingly, the positive performance was based on strong sales of cars and motor fuel. Auto sales were up 0.2 per cent, while fuel sales, which sometimes tend to firm up on the back of price rises rather than in response to a rise in demand, were 2.3 per cent higher over the month. Without the boost from car and fuel receipts, retail sales would actually have been down 0.1 per cent last month, suggesting that consumer spending remains subdued.

On a more positive note, a widely followed gauge of consumer sentiment showed signs of stabilisation over the early part of August. The Thomson Reuters/University of Michigan preliminary index of US consumer sentiment rose to 69.6 from 67.8 in July, beating forecasts of a rise to 69.3.

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