Big hike for U.S. retail sales

Retail sales south of the border rose more than expected last month as households boosted purchases of motor vehicles and clothing, suggesting the economy remained strong early in the third quarter.

Figures released Wednesday by the Commerce Department said retail sales increased 0.5% in July. But data for June was revised lower to show sales gaining 0.2% instead of the previously reported 0.5% rise.

Economists had forecast retail sales nudging up 0.1% in July. Retail sales in July increased 6.4% from a year ago.

Excluding automobiles, gasoline, building materials and food services, retail sales advanced 0.5% last month after a downwardly-revised 0.1% dip in June. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

Consumer spending is being supported by a tightening labour market, which is steadily pushing up wages. Tax cuts and higher savings are also underpinning consumption.

July's increase in core retail sales suggested the economy started the third quarter on solid footing after logging its best performance in nearly four years in the second quarter.