July retail sales flatten on weaker auto sales – USA TODAY
Consumers stayed cautious in their spending last month as growth in retail sales flattened to almost nothing.
The Commerce Department said Wednesday that retail sales were virtually unchanged from June’s $439 billion, ending five months of increases that have been getting smaller since March.
Excluding motor vehicles and parts, retail sales rose 0.1%, Commerce said.
Motor vehicle sales, while showing strong growth compared with a year earlier, fell 0.2% from June.
Ahead of the report, economists had forecast 0.3% growth overall and 0.4% growth excluding autos, according to the median forecast in Action Economics’ survey.
Sales fell at department stores, furniture and home furnishings stores, electronics and appliance stores and Internet retailers. Among the retail categories posting better sales figures were building materials, food and beverage, health and personal care, clothing and restaurants.
Commerce left unrevised its prior estimate of 0.2% growth in sales in June from May.
Retail sales shrank in January, then surged in February and March as better weather lured consumers out of their homes and into stores. But monthly growth in sales so far this year peaked with March’s 1.5% gain.
Consumer spending accounts for more than two-thirds of U.S. economic activity, and healthy growth there is a critical pillar girding economists’ forecasts for a stronger economy in the second half of 2014.
Economists predict the U.S. economy will expand at an annual rate of 3% or better this quarter and next as it rebounds from a 2.1% contraction in the first quarter. That was the worst quarter since the recession, but it’s been blamed mostly on the disruptive effects of a cold and stormy winter. The economy grew at a healthy 4% annual rate in the second quarter, according to the government’s preliminary estimate.
Despite July’s weak retail sales report, some economists say spending should improve in the rest of 2014 as the economy absorbs the power of an improving job market, which, in turn, should bolster wage gains. Employers have added more than 200,000 jobs a month for six straight months through July, the longest string since 1997.
“Consumer confidence measures are improving, and credit is more easily available. Falling gasoline prices in recent weeks will put more money in consumers’ pockets to spend on other goods and services,” said PNC Financial Services economists Stuart Hoffman and Gus Faucher in e-mailed comments after the retail sales figures were released.