Rise in US retail sales falls short of forecasts
Published 14/08/2010 | 05:00
Sales at US retailers rose less than forecast in July, indicating Americans lacked confidence in the economy and their finances to boost spending.
The 0.4pc increase, led by cars and petrol, followed a revised 0.3pc drop in June, figures from the Commerce Department in Washington showed.
Economists projected a 0.5pc gain, according to estimates in a Bloomberg survey. Excluding auto dealers and petrol stations, purchases fell 0.1pc.
Retailers may need to step up discounting unless job growth picks up and rekindles consumer spending, which accounts for 70pc of the economy. Federal Reserve policy makers said this week that the recovery was likely to be "more modest" than had been anticipated.
"We're going to have a consumer economy, which on the whole plays a supporting, but not a leading, role in the recovery," Richard DeKaser, chief economist at Woodley Park Research in Washington, said before the report.
"The improving labour market and household wealth positions are keeping consumers in the game, if only just barely."
Excluding cars, sales increased 0.2pc in July. They were forecast to rise 0.3pc after a 0.1pc fall the prior month.
A rebound in car sales, helped in part by incentives, was a source of strength in the report. Demand at car dealers rose 1.6pc, following a 1.3pc fall in June.
"We had an outstanding retail month from a consumer standpoint," said George Pipas, chief US sales analyst for Ford. "Still, it is a fragile situation."
Excluding cars, sales of building materials, furniture, clothing, appliances and general merchandise all declined.
Petrol station sales rose 2.3pc, yesterday's report showed. The data is not adjusted for inflation and the average cost of a gallon of petrol at the pump was little changed at $2.73 in July from the previous month, according to figures from AAA, the US's biggest motoring organisation.
Companies added 71,000 jobs in July after a gain of 31,000 the previous month that was smaller than initially estimated.
Total employment fell 131,000, reflecting the dismissal of temporary government workers as the decennial census wound down, the Labour Department reported.
The Federal Reserve said this week in its policy statement that since its meeting in June, "the pace of the recovery in output and employment has slowed. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth and tight credit".