U.S. retail sales increased more than expected in June, pointing to strong consumer spending, which could help to blunt some of the drag on the economy from weak business investment.
The report from the Commerce Department on Tuesday did not change market expectations that the Federal Reserve will cut interest rates this month for the first time in a decade.
But coming on the heels of solid employment growth in June and a pickup in underlying inflation, the signs of strong consumer spending further reduced the possibility of the U.S. central bank cutting rates by 50 basis points at its July 30-31 policy meeting as markets had initially anticipated.
Fed Chairman Jerome Powell last week told lawmakers the central bank would “act as appropriate” to protect the economy against risks stoked by a trade war between the United States and China, as well as slowing global growth.