US retail sales rebounded in July as American households increased purchases of cars and a range of other goods, the Commerce Department reported last week. This suggests that solid momentum in the economy as it entered the third quarter.

Retail sales increased by 0.6 per cent in the review month. June’s retail sales were revised up to unchanged from the previously-reported 0.3 per cent drop. Economists surveyed by Reuters had forecast retail sales to rise by 0.5 per cent in July. Retail sales excluding cars, fuel, building materials and food services rose by 0.3 per cent after a revised 0.2 per cent gain in June. This upbeat report should strengthen expectations of a Federal Reserve interest rate hike as early as next month.

Separately, German GDP improved by 0.4 per cent in the second quarter compared with predictions for a 0.5 per cent rise. On the other hand, France, Europe’s second largest economy, posted zero growth, and the Netherlands just 0.1 per cent, compared with forecasts of 0.2 per cent and 0.3 per cent respectively.

With the economic turmoil caused by China’s currency devaluation earlier in the week (see below) and Greece on the verge of a new bailout programme, the eurozone’s nascent revival may not yet be on a firm footing. European Central Bank policymakers who met in July called the recovery “disappointing” and said they’re ready to adjust their monetary stimulus programme if needed.

Finally, in the UK, unemployment increased in the second quarter, supporting the assessment that interest rates need not be raised quickly. In the second quarter, the unemployment rate, based on ILO methodology, edged up to 5.6 per cent from 5.5 per cent in the three months to May, but fell notably from 6.3 per cent in the same period of last year, the Office for National Statistics reported last week. The rate was in line with expectations. Meanwhile, the total number of people in work was 63,000 lower than the near-record level of 31.1 million reached in the first three months of 2015.

This article was compiled by Bank of Valletta plc for general information purposes only.