WASHINGTON • Sales at US retailers rose in July on growing demand for everything from cars to clothing, and a decline in the previous month was wiped away, signalling that consumers are propelling growth in the world's largest economy.

The 0.6 per cent advance matched the median forecast of economists and followed little change in June that was previously reported as a 0.3 per cent drop, a Commerce Department report showed yesterday.

Eleven of 13 major categories showed gains.

Rising employment, stronger finances and cheap fuel are helping draw consumers into stores and car dealerships.

Growth in household spending, which accounts for about 70 per cent of the economy, is bolstering the expansion as the Federal Reserve moves towards lifting interest rates this year for the first time since 2006.

"The consumer is in good shape," said Mr Brian Jones, a senior US economist at Societe Generale in New York. "The outlook for third-quarter spending is pretty decent."

A report from the Labour Department showed that applications for unemployment benefits last week hovered close to a four-decade low - a sign that firings remain muted as the job market firms.

While jobless claims climbed by 5,000 to 274,000 in the period ended on Aug 8, they remain close to the 255,000 reached a month ago that was the lowest since 1973.

The cost of goods imported into the US fell 0.9 per cent in July from the previous month, the biggest drop since January, another Labour Department report showed.

The decrease was led by a slump in fuel prices.

BLOOMBERG