Retail sales surpassed Wall Street's estimates in July, helping ease concerns of a significant slowdown in the US economy.

Retail sales rose 1% in July. Economists had expected a 0.4% increase in spending, according to Bloomberg data. Meanwhile, retail sales in June were revised lower to a 0.2% decline, from a prior reading that showed sales were flat from the month, according to Census Bureau data.

July sales, excluding auto and gas, rose 0.4%, above consensus estimates for a 0.2% increase. The control group in Tuesday's release, which excludes several volatile categories and factors into the gross domestic product reading for the quarter, increased 0.3% in July, above estimates for a 0.1% increase.

The update on consumer spending comes amid concerns about the health of the US economy. The latest data, combined with better-than-expected readings on inflation also released this week, have prompted economists to argue the Fed should be shifting its focus from inflation's trajectory to concerns about the labor market and what slowing there could mean for the overall economy.

"The focus is turning more to the growth data," Nicholas Brooks, the head of economics and investment research at ICG, told Yahoo Finance. "What's happening with retail sales and other indicators of consumer sentiment, I think are going to be increasingly important indicators for markets."

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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