US retail sales rose in July by more than forecast, suggesting consumers still have the wherewithal to sustain the economic expansion.

The value of retail purchases increased 0.7% in July after upward revisions in the prior two months, Commerce Department data showed on 15 August. The figures aren’t adjusted for inflation.

Sales increased in nine of 13 retail categories last month, including sporting goods stores, clothing outlets and restaurants and bars.

The latest figures illustrate how a strong labor market paired with rising wages is giving many Americans the ability to spend on a variety of goods and services. Consumers remain a key support to the US economy, so far buttressing it against recession in the face of high interest rates.

Sales at non-store retailers, which includes e-commerce, jumped 1.9%, the most this year and boosted by Amazon.com Inc.’s Prime Day event. The company said the first day of the two-day July event was its single-largest sales day ever. 

Earlier Tuesday, Home Depot Inc. announced earnings that exceeded the average analyst estimate. Comparable sales, while down, fell by less than forecast. Consumer giants like Target Corp. and Walmart Inc. will report their earnings later this week. 

The figures largely reflect spending on goods, rather than services, limiting the takeaways of this particular report. That said, this report suggests consumer demand for several merchandise categories remains firm, especially once adjusted for the decline in goods prices seen last month.

“This will boost optimism that because of the resilience of the consumer we can achieve that soft landing,” Lindsey Piegza, chief economist at Stifel Financial Corp., said on Bloomberg Television. At the same time, “this simply means the Fed will have to be more aggressive raising rates higher and keeping rates higher for longer,” she said.

Looking ahead, the consumer picture is fuzzy. On one hand, rising delinquencies, high debt service costs, the erosion of pandemic-era savings and the resumption of student loan payments are looming threats for the main engine of the economy. Conversely, many Americans are finally seeing their wages rise faster than inflation, strengthening household purchasing power.