Re­tail sales fall 0.2 per­cent

Spend­ing at depart­ment stores, restau­rants dips in June.

Northwest Arkansas Democrat-Gazette - - FRONT PAGE - In­for­ma­tion for this ar­ti­cle was con­trib­uted by Josh Boak and Christo­pher S. Ru­gaber of The As­so­ci­ated Press and by Michelle Jam­risko of Bloomberg News.

work on a dis­play at a store in Cary, N.C., in May. One econ­o­mist called Fri­day’s re­port on slip­ping re­tail sales “a dis­ap­point­ment as far as the re­silience of the con­sumer is con­cerned.”

WASHINGTON — Amer­i­cans cur­tailed their shop­ping in June, with less spend­ing at restau­rants, depart­ment stores and gaso­line sta­tions.

The spend­ing pull­back came de­spite a healthy job mar­ket and sug­gests slug­gish eco­nomic growth, econ­o­mists said.

Re­tail sales fell 0.2 per­cent last month af­ter de­clin­ing 0.1 per­cent in May, the Com­merce Depart­ment said Fri­day. Spend­ing at re­tail­ers has grown 2.8 per­cent over the past 12 months, a rel­a­tively mod­est pace given that the sales fig­ures aren’t ad­justed for in­fla­tion.

Michael Dolega, a se­nior econ­o­mist at TD Bank, called the re­port “a dis­ap­point­ment as far as the re­silience of the con­sumer is con­cerned.”

The de­cline re­flects in part a trans­for­ma­tive shift by con­sumers to­ward Ama­zon and other on­line re­tail­ers. Sales at depart­ment stores have dwin­dled. The rise of on­line shop­ping has left more re­tail­ers com­pet­ing on price or striv­ing to of­fer deeper dis­counts — fac­tors that can limit over­all sales fig­ures.

Even for­mer sources of strength in re­tail, such as restau­rants and auto deal­ers, have faced weak­en­ing sales in re­cent months.

The spend­ing fig­ures are closely watched be­cause con­sumers ac­count for roughly 70 per­cent of U.S. eco­nomic ac­tiv­ity. If their spend­ing slows, it can drag down growth across the broader econ­omy.

The econ­omy has ex­panded at a tepid an­nual pace of roughly 2 per­cent since the re­ces­sion ended eight years ago. Pres­i­dent Don­ald Trump has pledged to el­e­vate that rate above 3 per­cent. But some econ­o­mists say it’s doubt­ful he can do so with­out a jolt in re­tail spend­ing that would re­flect greater con­sumer con­fi­dence and sus­tained in­come gains.

Sales slipped 0.6 per­cent at restau­rants and bars in June. They fell 0.7 per­cent at depart­ment stores and 1.3 per­cent at ser­vice sta­tions, likely be­cause of lower gaso­line prices.

But not all sec­tors suf­fered de­clines in June. Spend­ing im­proved 0.4 per­cent at non­store re­tail­ers, a cat­e­gory that in­cludes on­line out­lets. Build­ing ma­te­ri­als stores en­joyed a 0.5 per­cent in­crease in sales.

● Auto deal­ers and fur­ni­ture stores also re­ported slight gains of 0.1 per­cent.

De­spite the slight im­prove­ment of sales by auto deal­ers, over­all mo­tor ve­hi­cle sales, which can in­clude pur­chases by rental car com­pa­nies, fell 3 per­cent in June.

While econ­o­mists pro­jected a slight in­crease, con­sumer prices were lit­tle changed in June and held back by cheaper home fur­nish­ings, cars and cloth­ing. House­holds also en­joyed

mod­estly priced air­fare and ho­tel stays at the start of the sum­mer, La­bor Depart­ment data showed Fri­day.

The un­changed con­sumer price in­dex read­ing fol­lowed a drop of 0.1 per­cent in May, the La­bor Depart­ment said. In­fla­tion has climbed just 1.6 per­cent from a year ago. That’s down sharply from Fe­bru­ary, when prices rose 2.7 per­cent from a year ear­lier.

Ex­clud­ing the volatile food and en­ergy cat­e­gories, prices rose 0.1 per­cent in June and 1.7 per­cent from a year ear­lier.

The dis­counts on mer­chan­dise

may partly ex­plain why the Com­merce Depart­ment’s data on re­tail sales, which aren’t ad­justed for prices, un­ex­pect­edly de­creased for a sec­ond month.

“Con­sumers are cau­tious to spend de­spite the pos­i­tive back­drop of up­beat job gains, ris­ing — al­beit slug­gish — wage growth and low in­ter­est rates,” Gre­gory Daco, chief U.S. econ­o­mist at Ox­ford Eco­nomics, wrote in a re­search note. “Weak con­sumer spend­ing in June means that mo­men­tum head­ing into the third quar­ter is fairly soft.”

Evap­o­rat­ing con­sumer op­ti­mism sug­gests mod­er­a­tion at the cash reg­is­ter as well. Sen­ti­ment weak­ened in early July to a nine-month low, ac­cord­ing to fig­ures re­leased Fri­day from the Univer­sity of Michi­gan. The lat­est de­cline shows post­elec­tion buoy­ancy has been erased amid Washington grid­lock around health care and tax leg­is­la­tion.


Best Buy em­ploy­ees

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.