Gauge of U.S. consumer spending posts biggest gain in seven months

WASHINGTON Tue Aug 13, 2013 1:31pm BST

WASHINGTON Aug 13 (Reuters) - A gauge of U.S. consumer spending rose in July at its fastest pace in seven months, a sign of quicker economic growth that could strengthen the case for the U.S. Federal Reserve winding down a major economic stimulus program.

Retail sales outside of cars, gasoline and building materials rose 0.5 percent last month, the Commerce Department said on Tuesday.

That reading is a key component of the department's measure of consumer spending, which is the biggest driver of the economy, as it accounts for about 70 percent of national output.

July's gain was the biggest since December, and suggests the economy could be regaining steam after tax hikes and federal budget cuts dragged on growth in the first half of the year.

Economists polled by Reuters had expected the core measure of retail sales to increase 0.3 percent.

Fed Chairman Ben Bernanke said last month that the U.S. central bank could begin reducing monthly bond purchases, which are aimed to lower borrowing costs and boost employment, by the end of the year.

In July, sales jumped 0.6 percent at U.S. department stores, the biggest gain since March 2012. Sales also posted strong gains at health and personal goods stores.

Sales of motor vehicles fell 1 percent during the month.

Overall retail sales rose 0.2 percent during the month, just below analysts' expectations. Overall sales were helped by a strong gain in gasoline receipts. (Reporting by Jason Lange; Editing by Paul Simao)

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