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Solid U.S. Retail Sales Bolster Fed Rate Hike Expectations



In this Thursday, Nov. 27, 2014, photo, a woman pays for merchandise at a Kohl's department store in Sherwood, Ark. Relying on credit for holiday shopping without a plan to pay off the debt quickly can easily cost you more in the long run. (AP Photo/Danny Johnston)

(AP Photo/Danny Johnston)

(Reuters) – U.S. retail sales rebounded in July as households boosted purchases of automobiles and a range of other goods, suggesting the economy was growing solidly early in the third quarter and bolstering the case for a Federal Reserve interest rate hike.

While other data on Thursday showed a rise in new applications for unemployment benefits last week, the trend still firmly pointed to a tightening labor market.

“U.S. consumers are out there spending and driving a large part of economic growth. It means the Fed will be confident that the economy is still on fairly strong footing and supports the view that they could raise rates in September,” said Luke Tilley, chief economist at Wilmington Trust in Wilmington, Delaware.

The Commerce Department said retail sales rose 0.6 percent last month, broadly in line with economists’ expectations, and were unchanged in June, an upward revision from the previously reported 0.3 percent drop. May’s data was also revised higher, adding to the report’s upbeat tone.


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