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Retail sales climb in the US

The US economy has continued its recovery with the nation’s retail sales once again climbing in July, despite the jump in price of some necessities such as petrol.

A rise of 0.2% in retail sales recorded in July marked the fourth consecutive month of improvements. Although the gain was slightly below analysts’ expectations, the result was dragged down by the auto, petrol and building supply categories. Otherwise, sales at department stores saw their largest improvement in 12 months with a 0.6% rise following a 1.2% drop in June, as reported by The Australian Financial Review.

Although there are hurdles that still need to be overcome, it seems that the US economy is improving at a rate that suits the market. For instance, whilst the data certainly reveals that consumers are “feeling better about the economy”, the rate of growth and improvements are not so great that the market feels concerned that the US Federal Reserve will abruptly put an end to its quantitative easing program.

With the data highlighting that consumers are indeed still spending, this comes as good news to retailers as well as property groups, such as Westfield (ASX: WDC), which operates a number of shopping centres throughout the US, as well as in Australia, New Zealand and the UK.

Likewise, with interest rates sitting at an all-time low in Australia, it is likely that we will see improvements throughout the retail sector as an element of confidence returns. In particular, companies such as Harvey Norman (ASX: HVN) or Myer (ASX: MYR) that sell furniture and goods for around the home could benefit, taking advantage of the pickup in the property sector.

Foolish takeaway

Currently, markets around the world are trading on increased confidence with the Federal Reserve still providing a stimulus for the economy. When it decides to lessen the effects of the bond-buying program, it is likely that we will see short-term shockwaves throughout global markets, which could affect consumer spending in the short-term.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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