UPDATE 1-Mexico Aug retail sales rise 3.7 pct over year-ago

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MEXICO CITY, Oct 24 (Reuters) - Mexican retail sales rose a higher-than-expected 3.7 percent in August over the same month a year ago, the government said on Wednesday.

Wholesale sales, often an indicator of the future performance of retail sales, edged up 0.4 percent compared with August of last year.

Economists in a Reuters poll on average had forecast retail sales MXRSLY=ECI would increase 3.03 percent in August.

Month over month, retail sales in August were up an inflation-adjusted 0.39 percent.

Pinched by a U.S. economic slowdown, Mexico's economy is expected to pare growth to around 3 percent this year from 4.8 percent in 2006 as factories ease production levels.

The government hopes healthy demand from consumers will help sustain growth.

Mexico's economy, which depends on the United States to buy almost all of its exports, grew 2.8 percent in the second quarter amid sluggish expansion in industrial output.