U.S. retail sales increased slightly in June, evidence consumers remain cautious despite steady job gains this year.
Retail sales rose 0.2 percent last month, the Commerce Department said in late July, held back by a sharp drop at building and garden supply stores. Sales also fell at restaurants and auto dealers.
The figures suggest Americans are still reluctant to spend freely, limiting growth in the April-June quarter. While employers have stepped up hiring since January, wage growth remains weak and is barely keeping up with inflation. Retail sales are closely watched because consumer spending accounts for 70 percent of the economy.
Still, economists were encouraged by some of the details in the report. A measure of retail sales that excludes volatile categories such as gasoline and autos rose a solid 0.6 percent. Clothing stores, sporting goods stores and department stores all recorded decent sales gains. And a category that includes online and catalog retailers jumped 0.9 percent in June and has increased 8.1 percent in the past 12 months. That’s nearly double the 4.3 percent growth in overall retail sales in the past year.
“While the headline number for June was disappointing, there were some underlying pockets of strength,” Jim Baird, chief investment officer for Plante Moran Financial Advisors, said. “The solid advance ... across numerous retail sectors suggests that consumers are spending, but doing so selectively.”
Sales at auto and auto parts dealers fell 0.3 percent, which contradicts strong data released by the automakers themselves earlier this month. The automakers said sales reached an eight-year high in June. The two sets of data can sometimes conflict on a month-to-month basis.
Retail sales were revised higher in May to 0.5 percent from 0.3 percent, and in April to 0.6 percent from 0.5 percent.
Most analysts now expect the economy will expand at about a 3 percent annual pace in the April-June quarter, a forecast little changed by the retail sales report. That’s not as strong a rebound as many economists had hoped from a weak first quarter, when the economy shrank 2.9 percent, largely because of cold weather.
Economists expected second-quarter growth of 3.5 percent a month ago, according to a survey by the National Association for Business Economics.
Several retailers have reported disappointing sales in the past month. Family Dollar, the Container Store and Gap have all blamed falling sales on consumer caution. The CEO of the Container Store said the chain has been hurt by a “retail funk.”
Yet some other stores reported healthy sales gains, including the discount club chain Costco and grocery chain Kroger’s.
Purchases of large items like autos may be leaving many Americans with less money to spend on discretionary items like clothes and electronics.