Shopping rebounds in July

WASHINGTON - Consumers returned to the malls in July after taking a breather in June, although worries about the future could make the rebound short-lived.

The Commerce Department reported Friday that consumer spending rose by 0.4 percent in July, double the June increase. The spending was supported by a solid 0.5 percent rise in incomes, the best showing in this area in four months.

The gain in spending was in line with expectations, while the increase in incomes was nearly double what analysts had expected. However, economists cautioned that the July increases could be temporary given recent weakness in consumer confidence caused by a prolonged slump in housing and the past few weeks of financial market turbulence.

In a separate report, consumer confidence as measured by a University of Michigan survey dropped sharply in August, falling by 7 points to 83.4, a 12-month low.

"Consumer spending moved ahead at a solid rate in July, but this latest drop in confidence will likely take some wind out of the consumers' sails in the remaining months of the year," said Brian Bethune, an economist at Global Insight.

In a third report, the Commerce Department said orders to factories jumped by 3.7 percent in July, even better than the expected 3.3 percent increase. The increase, which followed three months of lackluster gains, was led by an 11 percent jump in demand for transportation goods, including the biggest leap in orders for automobiles in more than four years.

The report on factory orders showed that demand for big-ticket durable goods rose by 6 percent, slightly better than the 5.9 percent the government estimated last week.