U.S. Retails Sales Fall 0.3%

By Kate Davidson 

        Americans extended their choppy spending pattern last month, with outlays pointing to sustained--though far from stellar--momentum for consumption growth heading into the second half.
        Sales at U.S. retailers and restaurants declined 0.3% from the prior month to a seasonally adjusted $442 billion in June, the Commerce Department said Tuesday. Figures for the prior two months were revised down to show weaker spending than previously estimated this spring.
        Retail-sales data, a key gauge for overall consumer spending, have been volatile in recent months. Overall, consumers have picked up their spending following a frigid winter that kept shoppers at home. But there's little evidence of a strong rebound.
        Consumer-spending growth is now tracking at a 2.6% annual rate of increase for the second quarter, compared with the 2.3% average over the current economic expansion, said J.P. Morgan Chief U.S. Economist Michael Feroli.
        "Consumer fundamentals still appear pretty favorable, particularly the vigorous gains in job creation, but household caution still appears to be holding back a more rapid pace of spending growth," Mr. Feroli said.
        The volatility led many economists to caution against drawing firm conclusions from the latest disappointment. Retail sales rose 1% in May, down from an initially reported 1.2% gain. Sales in April were flat, a downward revision from a previously reported 0.2% increase.
        From April through June, however, retail sales are up 1.5% compared with the first three months of the year, and have risen 1.7% compared with the same three-month period a year ago.
        Tuesday's report showed overall retail sales were up 1.4% in June from a year ago. "The month-to-month swings are frustrating and often confusing, but the underlying trends amidst these monthly swings are a much better guide," said Regions Financial Chief Economist Richard Moody.
        In June, sales fell across most categories, from furniture and clothing stores to auto dealers to home improvement and garden suppliers. Sales at restaurants and bars declined 0.2%, the most since January 2014.
        Business at Andiamo Restaurant Group in Detroit was strong earlier this year compared to the beginning of 2014, when severe winter weather kept many diners at home, said Joseph Vicari, the company's president and chief executive.
        Over the past six months, however, sales at the company's 17 Detroit restaurants are up only about 1%, and rose just 1.3% in June from a year ago. "We're not seeing high-end wines being bought," Mr. Vicari said. "If we run a promotion, we see more activity on the promotion than day-to-day business, for sure."
        Excluding autos, sales fell 0.1% in June. And excluding gasoline, sales fell 0.4%. When excluding both categories, sales were down 0.2% last month.
        Last month's declines were partly offset by a 0.8% gain in gas-station sales, as well as a 1% rise in sales at electronics stores, the biggest increase since September.
        Americans also spent more last month on health and personal care, and sporting goods, books and other hobbies, and on general merchandise.
        Many economists expect continued payroll gains and rising wages to support consumer spending throughout the second half of the year and provide an important boost to the overall economy. Consumer spending accounts for more than two-thirds of economic output.
        "Recent encouraging data about retail sales and light motor vehicle purchases in the beginning of the second quarter could be an indication that the pace of consumer spending is picking up," Federal Reserve Chairwoman Janet Yellen said in a speech last week.
        Write to Kate Davidson at kate.davidson@wsj.com
        (END) Dow Jones Newswires

        July 14, 2015 15:59 ET (19:59 GMT)

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