The gain in July sales would have been welcomed as a sign of more positive economic growth but for the fact that the originally reported increase of 0.5 per cent in June was revised to show a 0.3 per cent fall. The figures failed to support the dollar, which lost 0.62 pfennigs to close at DM1.4595.
Wall Street economists said the figures suggested consumers were continuing to repay debts rather than raise spending. The average rise in sales for the past two months was below the performance in April and May. Separate figures showed the rise in US consumer prices slowed to a gain of 0.1 per cent last month, from 0.3 per cent in June, with the 'core' rate of inflation inching up 0.2 per cent, matching the gain in June.
In the first seven months, consumer prices rose at a seasonally adjusted annual rate of 2.9 per cent compared with 3.1 per cent for 1991.
Worries about a lacklustre recovery were underlined by a report from the Congressional Budget Office, describing the economy as struggling to shed the 'shackles of recession'.
Interest rates on the US Treasury's bellwether 30-year bonds fell to a record low of 7.29 per cent at yesterday's auction from 8 per cent on 7 May - the lowest rate since 1977.