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Retail sales rise 0.4 percent in June on autos

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(AP photo)
In this Friday, June, 28, 2013, file photo, people shop fireworks at Pyro City retail store, in Winslow, Maine. The government reports on sales at U.S. retailers in June on Monday, July 15, 2013.

WASHINGTON – Americans spent more at retail businesses in June, buying more cars and trucks, furniture and clothes. But consumers cut back on many other purchases, a mixed sign for economic growth.

The Commerce Department said Monday that retail sales rose 0.4 percent in June from May, after a 0.5 percent increase the previous month.

Sales rose in June largely because of a 1.8 percent increase in auto purchases, the biggest since November. Higher gas prices also pushed service station sales up 0.7 percent.

Still, excluding the volatile categories of autos, gas and building supplies, so-called core retail sales rose just 0.15 percent. That's the weakest since January.

Americans spent less at department stores and restaurants in June. They bought fewer computers and electronics. And sales at home improvement stores, such as Home Depot, dropped 2.2 percent — although those sales are up nearly 10 percent over the past year.

Economists pay close attention to core sales because its components are used to calculate overall economic growth. Many said the report shows overall consumer spending has slowed from the start of the year. That should keep economic growth in the April-June quarter at or below an annual rate of 1 percent, they said, down from a subpar 1.8 percent rate in the January-March quarter.

"It is disconcerting that retail sales growth lost more momentum as the second quarter progressed," said Paul Dales, senior U.S. economist at Capital Economics.

There were some encouraging signs in the report. Americans continued to buy cars and trucks. Furniture sales jumped 2.4 percent last month, a sign that the housing recovery may be encouraging more home remodeling. And sales rose at clothing stores and general merchandise stores, which include Target and Wal-Mart.

Analysts expect a modest rebound in the second half of the year. The economy is expected to grow at a roughly 2.5 percent annual rate as the effects of federal tax hikes and government spending cuts begin to fade.

The strongest part of the retail economy has been auto sales. Over the past year, car and truck sales are up 11.4 percent, according to the government's data.

Earlier this month the nation's automakers also reported robust sales in June. Sales totaled 7.8 million from January through June, the best first half since 2007. And the outlook for the rest of 2013 is just as strong. Wider credit availability and hot-selling new vehicles are helping to boost sales. Demand for big pickups has been a key factor in higher sales.

Monday's government report comes after some retail chains reported their strongest sales gains since January. Revenue at stores opened at least a year rose 4.1 percent in June compared with the same month a year ago, according to a preliminary tally of 13 retailers by the International Council of Shopping Centers.

June is typically when stores clear out summer merchandise to make room for fall goods. Brisk sales mean that stores probably won't be stuck with piles of summer clothes that need to be cleared as back-to-school sales kick off in late July.

Retail stores are benefiting from more hiring, which gives more people money to spend. Employers added 195,000 jobs in June. Job gains have averaged 202,000 for the past six months, up from 180,000 for the previous six months.

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