Retail sales rose solid 0.8 percent in July

(AP) WASHINGTON - U.S. retail sales rose in July by the largest amount in five months, buoyed by more spending on autos, furniture and clothing.

The Commerce Department says retail sales rose 0.8 percent in July from June. The increase followed three months of declines, including a 0.7 percent drop in sales in June.

The retail sales report is the government's first look each month at consumer spending, which drives roughly 70 percent of economic activity.

Retail sales totaled a seasonally adjusted $403.9 billion in July, up 21.4 percent from the recession low hit in March 2009.

All major categories showed increases, a sign that consumers may be gaining confidence after the longest stretch of declines since the fall of 2008.

Auto purchases rose 0.8 percent. Excluding autos, retail sales also increased 0.8 percent.

Consumers paid more for gas in July than June, although that had little impact on the data. Retail sales excluding gasoline station sales were up 0.8 percent, the same as the overall increase.

The economy has shown some modest improvement in July. Employers added 163,000 jobs, the best month for job growth since February. And consumer confidence rose for the first time in five months. The combination appeared to translate into more spending by consumers.

Job growth hasn't been enough to push down the unemployment rate. It ticked up to 8.3 percent last month, the same level it was at the beginning of the year. And income has barely increased in the past 12 months, keeping budgets tight for those Americans who have jobs.

Overall, consumer spending on goods and services grew only 1.5 percent in the April-June quarter, the slowest pace in a year.

Americans are also saving more. The savings rate -- the percentage of after-tax income that consumers don't spend -- rose to 4.4 percent in June, the highest in a year.