Consumer spending held up even better than expected in July as inflation pressures showed more signs of easing, the Commerce Department reported Thursday.
Advanced retail sales accelerated 1% on the month, according to numbers that are adjusted for seasonality but not inflation. Economists surveyed by Dow Jones had been looking for a 0.3% increase. June sales were revised to a decline of 0.2% after initially being reported as flat.
Excluding auto-related items, sales increased 0.4%, also better than the 0.1% forecast.
There was also good news on the labor market front: Initial jobless claims for the week ending Aug. 10 totaled 227,000, a decrease of 7,000 from the previous week and lower than the estimate for 235,000.
Gains in sales were propelled by increases at motor vehicles and parts dealers (3.6%), electronics and appliance stores (1.6%) and food and beverage outlets (0.9%). Miscellaneous retailers saw a plunge of 2.5% while gas stations saw receipts climb just 0.1% and clothing stores were down 0.1%.
The report comes the same week as data showing that inflation eased slightly in July.
Prices that consumers pay for goods and services increased 0.2% on the month, and the annual inflation rate declined to 2.9%, its lowest since March 2021. At the same time, wholesale prices were up just 0.1% on the month and 2.2% on the year.
While the inflation numbers remain above the Federal Reserve’s 2% target, the data shows continued easing of price pressures that had peaked two years ago. Financial markets expect the Fed to respond with its first rate cut in more than four years when it next meets in September, though a resilient consumer could give policymakers more reason to take a measured approach to cuts.
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