Michael Pearce, at Capital Economics, said: "Consumption began the third quarter on a strong footing".
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 2.8 per cent annualised rate in the second quarter.
The Commerce Department said retail sales advanced 0.6 percent last month, the best showing since a gain of 0.9 percent in December. June's retail sales were revised to show a 0.3 per cent gain instead of the previously reported 0.2 per cent drop.
Amazon also played a role as its annual Prime Day promotion last month contributed to a 1.3% jump in sales at online retailers.
"The inherent volatility in the monthly retail sales reports notwithstanding, consumers will remain the key driver of growth in the US economy", Richard Moody, chief economist of Regions Financial, told MarketWatch.
Shares in Coach sank 15% after the handbag maker's full-year sales forecast fell short of analysts' expectations.
No structural damage to Dolphins QB Ryan Tannehill's knee
Barry Jackson of the Miami Herald reported that the injury was to his leg after going out of bounds. Tannehill fell awkwardly on the sideline while scrambling and didn't get up.
Retail sales for June and May also were revised higher, which should help to assuage concerns about consumer spending, But persistently sluggish wage growth has pushed Americans to dip into their savings to fund spending.
The dollar rose by more than 1 percent against the Japanese yen, touching its highest in more than a week and on pace for its largest daily rise against the yen since June.
Sales also rose 1.2% at auto dealers, 1.2% at home and garden centers and even 1% at department stores that have been losing ground to Internet rivals. Department store sales were down 1.3% from July a year ago but gained 1% over June of this year.
It earlier touched its highest level since July 26.
Amazon's Prime Day helped boost USA retail sales in July.
Excluding cars, retail sales still rose 0.5 per cent, while leaving out the volatile gasoline segment, sales were up 0.7 per cent. There were sales gains in other areas, including furniture stores, hardware stores and restaurants.