WASHINGTON — Americans bought more cars, restaurant
meals and building supplies in July, a rise in spending
that points to steady economic growth anchored by an
improving job market.
Retail sales climbed 0.6 percent last month after a flat
reading in June, the Commerce Department said Thursday.
July's increase suggests that the combination of solid
hiring and cheaper gasoline is contributing to rising
consumer confidence and spending after a muted start to
2015. Greater retail sales could help boost overall
economic growth because consumer spending accounts for
the bulk of U.S. economic activity.
"This report looks solid after a run of disappointing
numbers," said Ian Shepherdson, chief economist at
Revisions in the report also led economists to project
stronger overall economic growth.
A crucial sales category that excludes gasoline, autos,
building materials and food services rose 0.3 percent in
July, as sales totals were revised upward for May and
June. This increase led several economists to project
that the economy grew at an annual pace of roughly 3
percent during the second quarter, as opposed to the 2.3
percent estimate announced last month by the government.
Purchases at auto dealers rose 1.4 percent in July,
while restaurants and building materials stores both
recorded a 0.7 percent gain. Shopping also improved at
furniture stores, sporting goods retailers and
Even gas station sales increased in July, although lower
prices at the pump have generated a 15.2 percent drop in
sales over the past year.
Not all sectors improved last month. Sales waned at
electronics and department stores, while spending at
grocers was flat.
This reflects a broader change in the economy as
shoppers are shifting away from large malls to online
retailers, while generally spending less on traditional
merchandise like clothing. And when they're at stores,
shoppers are increasingly fixated on finding bargains.
Department store chains Macy's and Kohl's both reported
shortfalls in profits and sales for the May-July
quarter. That doesn't bode well for the rest of the
retailers like J.C. Penney, Wal-Mart and Target
Corp.,which are set to report in the next few days.
On Wednesday, Macy's Inc. reported a 26 percent drop in
profits and a 2.6 percent decline in revenue and said
that it no longer expects to see sales growth this year.
"The overall growth in the economy is modest at best and
we are seeing customers gravitating to restaurants,
recreational services, health care, electronics, rather
than to traditional general merchandise, apparel, and
furnishing categories," Macy's Chief Financial Officer
Karen Hoguet told investors.
To pump up growth, Macy's is looking for new ways to
grow outside its main business and is getting ready to
open its first group of outlet stores this fall under
Macy's BackStage that feeds into shoppers' obsession
In the past 12 months, total retail sales have risen 2.4
percent. That increase slightly exceeds average hourly
wage growth of 2.1 percent, a sign that consumers are
starting to spend their additional earnings after a
prolonged period of caution during the six-year recovery
from the Great Recession.
Retail spending has improved as employers have added a
solid 2.9 million jobs over the past year. The hiring
has driven the unemployment rate down to 5.3 percent
from 6.2 percent during that period.
Gasoline prices are averaging $2.59 a gallon nationwide,
a 25 percent drop over the past year, according to AAA.
But the drop in gas prices also weighed on retail sales,
which the government measures in dollars. When prices
drop and the dollar becomes cheaper relative to other
currencies, consumers might be buying the same amount of
items even if they're spending less money.
Economists watch the retail sales report closely because
it provides the first indication each month of the
willingness of Americans to spend. Consumer spending
drives 70 percent of the economy. Still, retail sales
account for only about one-third of spending, with
services such as haircuts and Internet access making up
the remaining two-thirds.
Monthly average of US jobless claims
falls to 15-year low
WASHINGTON — More people sought U.S.
unemployment aid last week, but the average for the
past month fell to the lowest level in 15 years, a
sign that few employers are cutting jobs.
Labor Department said Thursday that applications for
jobless benefits rose 5,000 to a seasonally adjusted
274,000 last week. Yet the four-week average, a less
volatile measure, dropped 1,750 to 266,250, the
lowest since April 15, 2000.
The figures indicate that six years after the
Great Recession forced 8.5 million layoffs,
Americans are enjoying solid job security.
Economists note that when adjusted for population
growth, the current level of applications is likely
at all-time lows.
Applications are a proxy for layoffs. The low
readings also suggest that employers are confident
about the economy's health and see little need to
The number of Americans receiving aid rose 15,000
to 2.27 million. That figure has fallen 10.7 percent
in the past 12 months. Some of those former
recipients have likely gotten jobs, but many others
used up all the benefits available to them.
The decline in applications for unemployment aid
echoes other data that point to a steadily improving
In July, employers added a net 215,000 jobs, and
the unemployment rate remained at a seven-year low
of 5.3 percent.
The economy has generated 5.6 million jobs in the
past two years, putting more paychecks into
Americans' hands. But the steady job gains and
falling unemployment rate have yet to boost wages.
Average hourly pay increased just 2.1 percent in
July from 12 months earlier, far below the 3.5
percent to 4 percent gains that have historically
occurred in healthy economies.
One trend holding back pay has been sluggish
increases in worker productivity. Productivity
measures output per hour worked and is a gauge of
It has expanded just 0.3 percent in the past
year, far below the 2.2 percent average annual gain
for the past six decades.