US retail sales edged up in July despite a drop in car sales. A category of purchases that excludes the most volatile areas rose by the most in seven months, a sign that stronger consumer spending could boost economic growth.

The Commerce Department said today that retail sales increased 0.2% in July from June. Sales had risen 0.6% in June from May.

The change in both months was driven by cars, which surged 2.9% in June but fell 1% in July.

''Core" retail sales, which exclude the volatile car, petrol and building supply categories, rose 0.5% in July. These sales had risen 0.1% in May and 0.2% in June. July's gain was the biggest such advance since a 0.5% rise in December.

Retail sales are closely watched because they are the US government's first report each month on consumer spending, which accounts for 70% of American economic activity.

Sales at department stores rose 0.6% in July, rebounding from a 1.2% drop in June. A broader category of general merchandise, which covers big retailers such as Wal-Mart and Target, rose 0.4% after no change in June.

Purchases at petrol stations rose 0.9%, an increase that partly reflected higher pump prices. Excluding petrol, retail sales would have risen 0.1% in July.

Today's figure show that sales at clothing stores rose 0.9% and 0.6% at grocery stores and restaurants. But at furniture stores, sales fell 1.4%, while purchases at building supply and appliance stores also weakened.

The US economy grew at lacklustre annual rates of 1.1% in the first quarter and 1.7% in the second quarter. But many economists think growth will rebound in the second half of the year to an annual rate of roughly 2.5%. Steady job growth will help.

In July, the unemployment rate fell to a four year low of 7.4%, from 7.6% in June, though employers added only a modest 162,000 jobs.

The drop in car sales in the government's retail sales report contrasts with reports from the car makers. General Motors, Ford, Chrysler, Toyota and Nissan have all reported double-digit sales gains from a year ago. The government's figures are seasonally adjusted and compare sales with the previous month, not with year-ago levels.