Retail Sales Rise a Weak 0.1% in July

From Reuters

Retail sales rose a weak 0.1% during July, the Commerce Department said today, in a sign of fading consumer buying power well before the coming oil-price shock.

The slight July rise followed a revised 1.1% June increase in total sales.

The two months of gains came after three straight months of sales declines between March and May and flat sales in February.

But the July increase was even weaker than anticipated by economists, who had forecast a 0.4% sales rise.

The slight pickup during July brought total sales to a seasonally adjusted $149.5 billion and was led by a 3.9% increase in sales of building materials after a 3.2% June rise.

Auto dealer sales fell 0.6% in July after rising by 0.6% in June.

Excluding the volatile category of auto sales, retail sales were up by 0.3% last month after increasing 1.2% in June, the department said.

June retail sales originally were reported rising 0.5%, but that was revised up to a 1.1% gain. Aside from June, the last substantial rise in sales was in January, when they gained 2.8%.

But even the moderate two-month sales pickup may be short-lived because other indicators of economic activity show consumers trimming spending and using less credit as their confidence about the economy's direction wanes.

With the impact of higher oil prices still to show up, the government said growth in the nation's total output of goods and services, or gross national product, already had slowed to an anemic 1.2% annual rate between April and June.

Gasoline prices have risen by as much as 20 cents a gallon since the Iraqi invasion of Kuwait, and higher oil prices are expected to ripple through the economy, affecting many other products.

The higher prices could lead to further reductions in spending by consumers.

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