BLBG:Retail Purchases In U.S. Unexpectedly Decreased 0.5% In June
Retail sales in the U.S. unexpectedly declined for a third straight month in June, a sign limited employment gains are taking a toll on the biggest part of the economy.
The 0.5 percent drop followed a 0.2 percent decrease in May, Commerce Department figures showed today in Washington. The decline was worse than the most-pessimistic forecast in a Bloomberg News survey in which the median projection called for a 0.2 percent rise. The June decrease was broad-based, including car dealers, department stores and gasoline stations.
A weakening job market is sapping households of the confidence and the incomes needed to boost expenditures, which account for about 70 percent of the economy. Without gains in spending at retailers such as Target Corp. and Macy’s Inc., the expansion will have a difficult time gaining momentum.
“The consumer slowed down during the second quarter,” George Mokrzan, director of economics at Huntington National Bank in Columbus, Ohio, said before the report. “An 8.2 percent unemployment rate is still very high and a negative. Disposable personal income growth has been quite weak, and that of course is impacting consumers.”
Estimates in the Bloomberg survey of 81 economists surveyed ranged from a decrease of 0.4 percent to a gain of 0.5 percent.
Nine of 13 major retail sales categories showed a decline last month, led by a 1.8 percent slump at gas stations that reflected declining fuel costs.
Regular fuel in June averaged $3.49 a gallon, or 22 cents less than in May, according to AAA, the nation’s biggest auto group.
Department Stores
Spending decreased 0.7 percent at department stores, 0.8 percent at furniture outlets and 0.6 percent at motor vehicle and parts dealers. The drop in sales of furniture was the biggest in a year. Demand at building-material stores fell 1.6 percent.
The results stand in contrast to industry figures. Cars and light trucks sold at a 14.1 million annual rate in June, up from the 13.7 million pace in May that was weakest this year, according to data from Ward’s Automotive Group.
Purchases excluding autos decreased 0.4 percent, the retail sales report showed. They were projected to be unchanged, the survey median showed.
Sales excluding automobiles and service stations fell 0.2 percent, compared with a projected gain of 0.2 percent in the survey.
U.S. GDP
The retail sales category used to calculate gross domestic product, which excludes sales at auto dealers, building material stores and service stations, decreased 0.1 percent after no change in the previous month.
Consumer spending climbed at a 2.5 percent annual rate in the first quarter, according to Commerce Department data. Economists surveyed this month forecast it increased at a 1.9 percent rate from April to June while the economy as a whole expanded at a 1.8 percent pace.
Industry figures show retailers’ same-store sales slumped in June. Sales at the more than 20 companies tracked by Retail Metrics Inc. increased 0.3 percent in June from the same time last year following a 4 percent gain in May.
Demand at Target rose 2.1 percent in June, falling short of the average projection for a 2.8 percent gain from analysts surveyed by Retail Metrics. Macy’s, the second-biggest U.S. department-store chain, posted a 1.2 percent increase compared with a 2.3 percent estimate.
Economy ‘Fragile’
“The economy in North America continues to be fragile as consumer confidence lags and job growth remains anemic,” Vernon Nagel, chairman and chief executive of Acuity Brands Inc. (AYI), a lighting fixture maker, said during a July 2 earnings call. “We expect the macroeconomic environment for the balance of 2012 to continue to be influenced by external concerns, including fiscal and monetary policy in U.S and European debt crisis which is eroding business and consumer confidence.”
A less optimistic consumer will probably restrain demand. The Thomson Reuters/University of Michigan preliminary sentiment index for July dropped to the lowest level this year as Americans grew more pessimistic about their finances, a report showed last week.
To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
