Retail Sales Bounce Back and Resume Their Climb

Retail sales rebounded in July, though the gain was smaller than expected, while lines for jobless benefits shrank for a second straight week, according to a mixed bag of government reports released Thursday.

The Commerce Department said retail sales rose 0.7% to a seasonally adjusted $336.5 billion, an improvement from a revised 0.5% decline in June.

July purchases excluding autos edged up 0.2%, their smallest gain since an outright drop in April, although some economists pointed out it was the third straight rise in the category. Sales minus autos in June were revised to a 0.3% advance from a 0.2% fall.

The June revisions bolstered the case made Tuesday by the Federal Reserve when it raised short-term interest rates and expressed hope the pothole the economy hit in June was temporary, and caused by high prices for energy.

“Consumers are back. Actually, they never went anywhere,” said Joel Naroff, president of Naroff Economic Advisors in Holland, Pa.

Still, Wall Street analysts had expected a stronger gain of 1.1% in July and a 0.4% increase outside of auto sales.

In a separate report, the Labor Department said claims for jobless benefits fell 4,000 to 333,000 last week.

Wall Street had been expecting new claims to rise to 338,000. The less-volatile four-week moving average of jobless claims fell to 339,250 from 343,500.