A surge in retail sales and rising manufacturing output suggest the U.S. economy’s strong growth in the second quarter continued into the third.
Retail sales—a measure of spending at U.S. stores, websites and restaurants—rose a seasonally adjusted 0.5% in July from the prior month, the Commerce Department said Wednesday. That was well ahead of economists’ forecasts for a 0.1% increase.
Compared with a year earlier, they grew 6.4% in July. That’s more than double the pace of inflation, which increased 2.9% in the year to July, as measured by the Labor Department’s consumer-price index.
Robust hiring and low unemployment mean more households have income to spend. That is being amplified by tax cuts, which have resulted in less paycheck withholding.
With demand strong, production is also up. U.S. factory output rose 0.3% in July, the Federal Reserve said Wednesday, and was up 2.8% from a year earlier, largely on higher auto and computer production.
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