WASHINGTON – Sales at the nation's retailers rose by a brisk 1.2 percent in July, but much of the strength reflected people taking advantage of free-financing offers and other incentives to buy cars and trucks.
Excluding sales of automobiles, retail sales went up by just 0.2 percent in July, the Commerce Department reported Tuesday. The retail sales numbers matched many analysts' expectations.
In July, a sizable 4.2 percent increase in sales of automobiles outweighed cutbacks elsewhere. Shoppers trimmed spending on furniture and home furnishings, electronics and appliances, building and garden supplies, and clothes, a sign that consumers have grown more cautious amid stock market turmoil and economic uncertainties.
Still, the fact that consumers were still buying offered a dose of good news for the struggling economic recovery. Consumer spending accounts for two-thirds of all economic activity in the United States.
Economists worry that a wave of accounting scandals that has shaken Americans' confidence in corporate leaders, the roller-coaster stock market and a sluggish job market could chill consumers' willingness to spend in the months ahead, something that would slow economic growth.
The recovery has lost considerable momentum from the beginning of the year. The economy grew by just 1.1 percent in the spring, down from a brisk 5 percent pace in the first quarter.
Some economists are predicting lackluster growth for the second half of this year as well.
The 1.2 percent increase in retail sales in July, followed a revised 1.4 percent advance in June, stronger than the government previously reported.
Worried about sales, some big auto makers recently brought back generous incentives, including free-financing deals, to lure buyers. Sales at automobile dealers rose by 4.2 percent in both June and July.
Another factor contributing to higher overall retail sales in July was a 2.7 percent increase in sales at gasoline stations. That followed a 0.1 percent dip in June.
Shoppers also spent more at health and beauty stores, pushing sales up by 1.1 percent in July, after a 0.3 percent advance. And, sales at bars and restaurants went up 1 percent last month, on top of a 0.7 percent gain in June.
At department stores and other general merchandise outlets, sales edged up 0.3 percent, down from a 1.1 percent rise in June.
Shoppers were more selective when it came to buying other goods.
Sales at furniture and home furnishing stores dropped 1.4 percent in July, the biggest decline since September. In June, such sales decreased by 1.1 percent.
At electronics and appliances stores, sales fell 1 percent, the worst showing since January, and nearly erasing all of the 1.1 percent increase reported in June.
Sales of building materials and garden supplies went down by 1.2 percent in July, the largest decline since December. That followed a 0.6 percent increase in June.
At clothing and other accessory stores, sales fell by 1.3 percent in July, down from a 2.5 percent advance the month before.