Retail Sales Jump 0.5% in June After 3-Month Slump

Retail sales, bolstered by a big jump in department store sales, shot up 0.5% in June, posting the first increase in five months, the government said today.

The Commerce Department said sales rose to a seasonally adjusted $147.82 billion last month, up $784 million from the May sales level.

The June increase came after a string of three consecutive declines, something that had not happened since 1981, during the last recession.

Since consumer spending accounts for two-thirds of total economic activity, prolonged weakness in this area raises fears that the economy could be headed for a downturn.

The June rebound should lessen recession anxieties, but analysts cautioned against reading too much into one month’s change, especially given the fact that retail sales had been sluggish for most of this year.

This was the first increase since a big 2.8% increase in January. After that gain, retail sales showed no change in February and then fell 0.4% in March, 1% in April and 0.6% in May.

With job growth very weak this year, consumer confidence about the future has slipped and resulted in spending cutbacks, especially for big-ticket items such as cars and appliances.

The June increase was led by a 2.8% rise in spending at department stores, reflecting a rebound after a big 2.2% drop in May.

The 2.8% jump in department store sales was dramatic, given the fact that sales in this sector had fallen for three months, but analysts attributed part of the gain to price markdowns to encourage purchases of slow-moving summer clothes.

Auto sales edged up a tiny 0.1% in June after being down 0.2% in May. Weakness in auto sales has been a major factor contributing to the overall sluggishness of consumer spending this year.

Sales at building material and hardware stores rose 1.3% after falling 0.2% in April.