Autos led drop in sales at U.S. retailers in July

WASHINGTON —  Retail sales delivered their weakest performance in five months in July as shoppers shunned autos while they paid more for gas.

With the mass mailing of $92 billion in tax rebate checks now just a memory, there is concern the fragile economy could slow even more in the second half of this year.

The Commerce Department reported Wednesday that retail sales fell 0.1% last month, the first decline since a 0.5% tumble in February. It was a slightly worse showing than the flat reading economists had expected and followed a revised but still weak 0.3% reading for June.

Analysts said retail sales would have been more feeble without the rebate payments the government sent out in May, June and July. Those checks helped counter plunging home values, rising unemployment and soaring gasoline prices.

The bulk mailings are over, though, leaving economists worried about what will happen to spending.

“Cautious and uncertain consumers are watching their wallets, and with the back-to-school shopping season underway, that does not bode well for retailers,” said Joel Naroff, chief economist at Naroff Economic Advisors.

Auto sales fell 2.4% in July during another dismal month for carmakers. They saw sales activity plunge to the lowest level in 16 years as the weak economy and rising layoffs severely dampened demand.

Excluding the drop in autos, retail sales would have posted a 0.4% increase. Although that’s a positive reading, it still represents the weakest showing for sales excluding autos in five months.

Much of what little strength there was in July came from a 0.8% jump in sales at gasoline stations because of surging prices rather than increased demand.

In other economic news, the Labor Department reported that surging oil prices helped send import prices up 1.7% in July and left them rising 21.6% compared to a year earlier, the biggest year-over-year reading on record.