Retail Stores Register Sluggish Gains in June

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Sales at U.S. retail stores gained sluggishly for a second straight month in June, supported primarily by a pickup in sales of new cars that stemmed partly from price discounting, a government report on Friday showed.

The Commerce Department said June retail sales were up 0.2 percent to a seasonally adjusted $292.9 billion following a revised 0.4 percent gain in May.

June sales were slightly weaker than the 0.3 percent advance forecast by Wall Street economists. The report implied a cautious shopping mood among consumers, whose spending fuels two-thirds of national economic activity.

Nonetheless, analysts said it was encouraging that there was at least some continuing increase in retail business, even if it was not up to forecast levels for the month.

``What it suggests is you have a consumer that is a bit weaker than might have been expected but certainly not falling off the end of the table,'' said economist Tim O'Neill of the Bank of Montreal in Toronto.

The only sign of solid strength in June sales was for new cars and trucks, which climbed 1.5 percent to $72.88 billion following a 0.2 percent gain in May. Analysts said before the report was issued that discounts offered by some carmakers last month likely would bolster dealer sales.

Some Consumer Support

But excluding new-car sales that account for one-quarter of monthly retail business, overall retail sales fell 0.2 percent in June -- the first such decline in three months -- following a 0.4 percent gain in May.

Economist Kevin Flanagan of Morgan Stanley in New York said the report ``underscores that consumers are still providing a degree of support for the economy as a whole.

``It's somewhat encouraging to see that spending for big-ticket items remains on a positive swing,'' he added.

Electronics and appliance stores registered a 1.1 percent gain in June sales to $7.18 billion after being flat in May. General merchandise store sales were up 0.4 percent to $34.71 billion following a 1.3 percent drop in May.

The second quarter is expected to be one of the weakest for the U.S. economy this year, after a weak 1.2 percent rate of advance in gross domestic product during the first quarter. Many economists think second-quarter GDP may have stalled or barely advanced.

That makes the focus on consumer spending all the more intense, since consumption of goods and services is the main driver for total economic activity.